The Real Estate Local Market Trends Report

Kim Connor

OCTOBER/NOVEMBER 2012

Intero Real Estate Services 12900 Saratoga Ave. Saratoga, CA 95070 Phone: (408) 863-3001 FAX: (408) 351-0190 kconnor@interorealestate.com http://www.KimConnorBetterLiving.com DRE #01735816

Inside This Issue

> LOCAL MARKET TRENDS ..................... 1 > MORTGAGE RATE OUTLOOK ............... 2 > HOME STATISTICS .............................. 2 > FORECLOSURE STATS ........................ 3 > CONDO STATISTICS ............................ 3 > HOME SALES & PENDING CHART ........ 4

The Real Estate Report local market trends Trends at a Glance

SANTA CLARA COUNTY

Where Have All the Sellers Gone?

(Single-family Homes) Sep 12 Aug 12 Sep 11 Median Price: $ 655,000 $ 675,000 $ 550,000 Av erage Price: $ 832,293 $ 860,478 $ 701,673 Home Sales: 886 1,026 929 Pending Sales: 1,769 1,577 1,628 Inv entory : 1,228 1,194 1,823 Sale/List Price Ratio: 102.5% 101.8% 98.9% Day s on Market: 34 32 54 Day s of Inv entory : 40 35 57

Followers of the market report know inventory in Santa Clara County has been at or near record lows for the past year.

With the economy as strong as it is here, people have jobs, so they’re staying put. Retirees are also staying put to be near their families.

This has had a salubrious effect on prices. The median price for single-family, re-sale homes is up 29% year-to-date.

The only other explanation for low inventory is homeowners who are underwater. Yet, Santa Clara price to list price ratio has been over 100% for the County has the lowest percentage of underwater past seven months. owners in the state, about 25% according to The average price for homes was up 18.6% yearDataQuick. over-year.

So, for the foreseeable future, we will have rising Pending home sales were up 8.7% year-over-year. prices fueled by lack of inventory and multiple offers.

SALES MOMENTUM…

The 3-month moving average median price is up 51% from the bottom of the market: March 2009.

Santa Clara County Price Differences from January & Peak & Trough Hom es: detached YTD Peak % Trough % Peak Trough 3-month 29% -22% 51% Jun-07 Mar-09 12-month 6% -29% 17% Nov -07 Nov -09 Hom es: attached 3-month 40% -26% 45% Jun-07 Apr-09 12-month 12% -36% 12% Dec-07 Dec-11

With money at an all-time low, and property prices for homes dropped 1.2 points to +0.8. still about 22% below their peak in 2007, those who PRICING MOMENTUM… have cash or can get a loan are in prime position to has been on the up-swing the past eight months. It make a purchase. surged 2.5 points to +4.5.

SEPTEMBER MARKET STATISTICS

Which brings us back to the question, “where are all the sellers?”

Sales of single-family, re-sale homes continued to drop last month, falling 4.6% year-over-year.

It’s pointless to read the national press on market conditions in Silicon Valley. They don’t apply!

Home inventory was off 32.6% from last September.

WE CALCULATE… momentum by using a 12-month moving average to eliminate seasonality. By comparing this year’s 12-month moving average to last year’s, we get a percentage showing market momentum.

There is no “massive shadow inventory”. There are The median price for homes rose 19.1% year-over- CONDO STATISTICS… year. The median price has been higher than the The median price for condos was up 24% yearno investors buying foreclosed properties in bulk. year before for the past eight months. The sales over-year. That’s seven straight months of double-digit gains.

Santa Clara County Homes: Sales Momentum Sales were off 6.3%, while pending sales fell 12.2%.

60.0 40.0

Condo inventory was down 76.2% from last September.

20.0 0.0 0 F MA M J J A SO N D0 F MA M J J A SO ND1 F MA M J J A SO ND1 F MA M J J A SO ND1 F MA M J J A S -20.0 8 9 0 1 2 -40.0 -60.0 Sales

median

Pending

This is an extraordinarily tough market for buyers. It’s important to be calm and realistic. If you don’t know what to do or where to begin, give me a call and let’s discuss your situation and your options.

© 2012 rereport.com

Kim Connor | kconnor@interorealestate.com | Phone: (408) 863-3001

The Real Estate Report

Mortgage Rate Outlook Oct 5, 2012 -- Even though some of the economic news was a little warmer this week, mortgage rates continued their downward drive. However, the decline this week was more muted than last week's, and with the cumulative benefit of the Fed's "QEternity" program of purchasing Mortgage-Backed Securities closing in on a quarter-percentage point, we may not have all that much room for rates yet to fall at the moment.

HSH.com's broad-market mortgage tracker found the overall average rate for 30-year fixed-rate mortgages declined by just two basis points (0.02%) to 3.68%, a new record low, while the FRMI's 15-year companion shed three basis points to land at a new record low of an even 3%. FHA-backed 30-year FRMs downshifted by just a single basis basis point, as the most viable option for credit- or equity-impaired borrowers trickled to a new low of 3.28%. Finally, the overall average rate for 5/1 Hybrid ARMs held fast at 2.70% for a third consecutive week, remaining at a record low.

4.0%

5.0%

6.0%

7.0%

8.0%

The chart above shows the National monthly average for 30-year fixed rate mortgages as compiled by HSH.com. The average includes mortgages of all sizes, including conforming, "expanded conforming," and jumbo.

The Fed's program of manipulating mortgage prices is a two-edged sword, or at least a Catch-22. The Fed wants to see more economic growth, so it pushes mortgage rates down to help foster growth. If the economy is improving or does start to improve, the Fed will need to do less to achieve its goals, and

At some point, and for some time thereafter, we are likely to see both. How long such conditions -- a rising economy with rock-bottom rates -- might last is anyone's guess at this point. The Fed has pledged to keep its foot on the gas even after the economy gets more fully underway, but that strikes us as a nervous time in the markets, indeed.

It would appear that the decline in rates has softened, at least for the moment. When the Fed announced its program, we reckoned it might have a value of a quarter-percentage point on rates given current conditions, and we'll stand by that assessment for at least the moment. That being the case, and since much of that expected decline is now in place, we'll call for rates to be about unchanged next week.

Santa Clara County Homes - Prices & Sales (3-month moving average—prices in $000's) Median & Average Prices

07-12 04-12 01-12 10-11 07-11 04-11 01-11 10-10 07-10 04-10 01-10 10-09 07-09 04-09 01-09 10-08 07-08 04-08 01-08 10-07 07-07 04-07 01-07 10-06 07-06 04-06 01-06 3.0%

mortgage rates would tend to rise with the improving climate... which in turn might temper growth. What to cheer for? Broad-based economic gains which take the Fed out of the picture, letting markets again discover the true price of mortgages? Or to root for interest rates to remain at artificially low levels, so that more homeowners can profitably refinance, or to see home prices reflated though the inducement of affordability-driven sales?

$1,100 $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100

1,300 1,100 900 700 500 300 0 FMAMJ JASOND0 FMAMJ JASOND1 FMAMJ JASOND1 FMAMJ JASOND1 FMAMJ JAS 8 9 0 1 2

100

Single-family Hom e Sales

30-Year Fixed Mortgage Rates

Santa Clara County - September 2012 Single-Family Homes

Page 2

Cities County Campbell Cupertino Gilroy Los Altos Los Altos Hills Los Gatos Milpitas Monte Sereno Morgan Hill Mountain View Palo Alto San Jose Santa Clara Saratoga Sunny v ale

Prices Median Average Sales Pend Inven $ 655,000 $ 832,293 886 1,769 1,228 $ 696,000 $ 709,220 17 27 32 $ 1,224,000 $ 1,249,170 18 31 29 $ 456,500 $ 500,965 46 113 51 $ 1,850,000 $ 1,919,910 22 39 46 $ 2,667,500 $ 2,895,000 8 15 53 $ 1,273,000 $ 1,458,030 29 37 96 $ 587,500 $ 643,150 20 76 24 $ 2,025,000 $ 2,025,000 2 5 12 $ 585,000 $ 631,288 42 99 90 $ 1,085,000 $ 1,159,960 25 25 20 $ 1,804,000 $ 2,041,970 28 43 55 $ 570,000 $ 629,028 475 1,056 508 $ 603,000 $ 636,769 58 62 36 $ 1,675,000 $ 1,693,150 26 45 85 $ 989,900 $ 925,955 60 73 25

% Change from Year Before DOI 40 55 47 32 61 192 96 35 174 62 23 57 31 18 95 12

SP/LP 102.5% 100.6% 103.8% 102.2% 101.2% 96.8% 100.1% 102.9% 97.3% 100.8% 105.6% 106.7% 102.2% 104.2% 100.2% 104.7%

Prices Med Ave 19.1% 18.6% 8.1% 3.5% 14.9% 14.7% 18.0% 9.3% 23.1% 9.4% 29.5% 36.9% 0.8% 18.1% 33.5% 26.6% 26.6% 19.5% 20.0% 14.7% 11.9% 18.3% 32.4% 27.6% 18.4% 15.5% 10.2% 5.2% 8.2% 7.1% 10.2% 15.6%

Sales -4.6% -15.0% -10.0% 0.0% -18.5% 60.0% 31.8% -9.1% -33.3% 23.5% 13.6% -12.5% 1.5% 20.8% 30.0% 42.9%

Pend2 8.7% -35.7% -16.2% -15.0% 62.5% 150.0% -14.0% 61.7% 66.7% 17.9% 8.7% 48.3% -8.2% -28.7% 55.2% 4.3%

Inven -32.6% -39.6% -56.7% -61.9% -22.0% 10.4% -10.3% -61.9% 33.3% -32.8% -37.5% 1.9% -51.3% -53.2% -29.2% -67.9%

Santa Clara County Homes: Year-Over-Year Median Price Change 40.0% 30.0% 20.0% 10.0% 0.0% -10.0% -20.0%

0 F MA M J J A SO ND0 F MA M J J A SO ND1 F MA M J J A SO ND1 F MA M J J A SO ND1 F MA M J J A S 8 9 0 1 2

-30.0% -40.0% -50.0%

© 2012 rereport.com

FORECLOSURE STATISTICS Notices of default, the first step in the foreclosure process, in Santa Clara County fell 24.3% in August from July, and they were down 56.3% from August 2011.

Notices of sale, which set the date and time of an auction, and serve as the homeowner's final notice before sale, were down 20.4% compared to July, and were down 47.2% year-over-year.

After the filing of a Notice of Trustee Sale, there are three possible outcomes. First, the sale can be cancelled for reasons that include a successful loan modification or short sale, a filing error, or a legal requirement to re-file the notice after extended postponements.

Alternatively, if the property is taken to sale, the bank will place the opening bid. If a third party, typically an investor, bids more than the bank's opening bid, the

property will be sold to the third party; if not, it will go back to the bank.

If your house is currently listed with another broker this is not intended as a solicitation of that listing.

In July, cancellations were up 7.2% compared to June.

Looks like the banks are modifying loans!

Properties going back to the bank rose 19.7% in August from July. Year-over-year, they were down 67.1%.

The total number of properties that have had a notice of default filed decreased by 44.8% year-over-year.

The total number of properties scheduled for sale declined by 23.6% year-over-year.

The total number of properties owned by banks was down 48.3% year-over-year to about 1,038.

For further details and a city-by-city breakdown of foreclosure statistics, go to http://foreclosureradar.com.

Santa Clara County Condos- Prices & Sales $600 $550 $500 $450 $400 $350 $300 $250 $200 $150 $100

450

Table Definitions _______________

400 350 300 250 200

0 FMAMJ JASOND0 FMAMJ JASOND1 FMAMJ JASOND1 FMAMJ JASOND1 FMAMJ JAS 8 9 0 1 2

Condo Sales

Median & Average Prices

(3-month moving average—prices in $000's)

Median Price The price at which 50% of prices were higher and 50%were lower.

150

Average Price

100

Add all prices and divide by the number of sales.

SP/LP

Santa Clara County - September 2012 Condos/Townhomes Cities County Campbell Cupertino Gilroy Los Altos Los Gatos Milpitas Morgan Hill Mountain View Palo Alto San Jose Santa Clara Saratoga Sunny v ale

Prices Median Average Sales Pend Inven $ 395,000 $ 451,281 330 723 239 $ 368,600 $ 386,277 13 11 7 $ 617,000 $ 628,750 8 5 5 $ 179,500 $ 184,750 4 11 5 $ 1,098,000 $ 846,000 3 3 5 $ 740,000 $ 743,495 11 13 17 $ 435,000 $ 397,467 15 40 8 $ 242,000 $ 251,900 5 15 5 $ 595,000 $ 627,099 23 38 12 $ 805,000 $ 932,633 15 10 15 $ 325,000 $ 357,334 182 472 129 $ 350,000 $ 424,258 26 48 15 $ 832,500 $ 917,500 4 6 5 $ 600,000 $ 573,614 21 51 11

% Change from Year Before DOI 21 16 18 36 48 45 15 29 15 29 21 17 36 15

SP/LP 103.6% 106.6% 102.0% 100.4% 103.4% 98.5% 105.0% 99.0% 104.6% 105.1% 103.3% 104.8% 103.8% 104.2%

Prices Med Ave 24.0% 24.9% 5.6% 7.0% 0.8% -8.1% 42.5% 46.7% 91.0% 47.1% 38.3% 37.7% 21.5% 22.4% 10.5% 20.4% 15.5% 14.1% 0.8% 12.4% 22.6% 21.6% 21.3% 22.6% n/a n/a 33.7% 30.2%

Sales -6.3% 30.0% 14.3% 100.0% 200.0% 37.5% 36.4% 66.7% 21.1% 36.4% -0.5% -13.3% n/a -22.2%

Pend2 -12.2% -50.0% -44.4% 266.7% -25.0% -31.6% 0.0% -16.7% 0.0% -23.1% -11.9% -18.6% n/a 15.9%

Inven -76.2% -75.9% -68.8% 66.7% -16.7% -55.3% -57.9% -58.3% -67.6% -16.7% -68.2% -48.3% n/a -77.1%

Sales price to list price ratio or the price paid for the property divided by the asking price.

DOI Days of Inventory, or how many days it would take to sell all the property for sale at the current rate of sales.

Pend Property under contract to sell that hasn’t closed escrow.

Inven Number of properties actively for sale as of the last day of the month.

Page 3

THE REAL ESTATE REPORT Santa Clara County Kim Connor Intero Real Estate Services 12900 Saratoga Ave. Saratoga, CA 95070 Phone: (408) 863-3001 FAX: (408) 351-0190 kconnor@interorealestate.com http://www.KimConnorBetterLiving.com

Santa Clara County Homes: Pending & Existing Home Sales (3-month moving average) 3,000 2,500 2,000 1,500 1,000 500 0 0 FMAMJ JASOND0 FMAMJ JA SOND0 FMAMJ JA SOND1 FMAMJ JA SOND1 FMAMJ JA SOND1 FMAMJ JAS 7 8 9 0 1 2 Sales

Pending

Š 2012 rereport.com

The Real Estate Market Trends Report is published and copyrighted by http://rereport.com.