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Calculated Risk: Are house prices a new bubble?

Calculated Risk: Are house prices a new bubble?

On Friday, I posted five economic questions I'm frequently asked. I'll post some thoughts on each of these topics over the next couple of weeks.

A common question is: Are house prices in a new bubble?  My short answer was: No.  Here is an explanation.

First, we need to define a bubble. Way back in April 2005, when I was very bearish on housing, I wrote: Housing: Speculation is the Key. From that post:

I have taken to calling the housing market a "bubble". But how do I define a bubble?

A bubble requires both overvaluation based on fundamentals and speculation. It is natural to focus on an asset’s fundamental value, but the real key for detecting a bubble is speculation - the topic of this post. Speculation tends to chase appreciating assets, and then speculation begets more speculation, until finally, for some reason that will become obvious to all in hindsight, the "bubble" bursts.

First, on valuation: two key measures are house prices to income, and real house prices. The Census Bureau released the Income, Poverty and Health Insurance Coverage in the United States: 2016 in September. The report showed a significant increase in the real median household income: 

The U.S. Census Bureau announced today that real median household income increased by 3.2 percent between 2015 and 2016 ... Median household income in the United States in 2016 was $59,039, an increase in real terms of 3.2 percent from the 2015 median income of $57,230. This is the second consecutive annual increase in median household income.

The firs two graphs use annual averages of the Case-Shiller house price index - and the nominal median household income (and the mean for the fourth fifth income) through 2016.


House Prices and Median Household IncomeClick on graph for larger image.

This graph shows the ratio of house price indexes divided by the Median Household Income through 2016 (the HPI is first multiplied by 1000).

This uses the annual average National Case-Shiller index since 1976.

As of 2016, house prices were above the median historical ratio - but far below the bubble peak. 

The second graph is similar but uses the mean of the fourth fifth household income (if we separate households into fifths, this is the second highest income group). 


House Prices and WagesThese are key households since they are more likely to be homeowners (and home buyers).

Using this group, prices are well below the bubble peak.

By these measures, we could argue house prices are 15% to 20% too high, but this is a relatively small overvaluation compared to the 50%+ overpricing at the peak of the housing bubble.


Real House PricesThe third graph shows the monthly Case-Shiller National index SA, and the monthly Case-Shiller Composite 20 index SA (through July) in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices.

At first glance, this seems to suggest prices are 30% too high (and were maybe 50% to 60% too high during the bubble).  However there is an upward slope to real prices, see The upward slope of Real House Pricesand Lawler: On the upward trend in Real House Prices.

After adjusting for the historical upward slope in real prices, I'd estimate prices are about 15% too high.

On Speculation: Back in 2005, it was easy to identify excess speculation.  There is currently some flipping activity, but this is more the normal type of flipping (buy, improve and then sell).  Back in 2005, people were just buying homes are letting them sit vacant - and then selling without significant improvements.  Classic speculation. 

And even more dangerous during the bubble was the excessive use of leverage (all those poor quality loans).  Currently lending standards are decent, and loan quality is excellent.

So prices may be a little overvalued, but there is little speculation - and I wouldn't call house prices a bubble - and I don't expect house prices to decline nationally like during the bust.


FSBOs Hit Record Low For Third Straight Year

FSBOs Hit Record Low For Third Straight Year

For the third year in a row, for-sale-by-owner (FSBO) transactions accounted for only 8 percent of recent home sales, the lowest share that the National Association of Realtors (NAR) has recorded in its annual Profile of Home Buyers and Sellers since the report was first released in 1981.

FSBO sales hovered between 12 percent and 14 percent from 2001 to 2008. In addition, the share of recent homesellers who sold with an agent remained at a record high of 89 percent in the last year.

NAR Managing Director of Survey Research Jessica Lautz says FSBO sales have flattened due to current market conditions where sellers need a competitive edge that only an agent can provide.

“What we do see is that sellers are working with agents to help market their homes to potential buyers, sell it in a specific time frame and price the home competitively,” she said. “Pricing the home competitively is really important for sellers today, especially because everything is rapidly changing with prices.”

“So knowing how to price that home so they can sell quickly is important, and that’s difficult for FSBOs to do,” she added.


Survey: Buyers Leery of Online Mortgage Info

Survey: Buyers Leery of Online Mortgage Info | Realtor Magazine

Consumers trust real estate professionals and lenders more than online sources or family and friends when it comes to obtaining information about mortgages, according to a new Fannie Mae survey based on 1,000 responses. Recent home buyers surveyed, including younger age groups, say they consulted multiple sources of information about the mortgage process but found lenders and real estate agents to be more credible than mobile apps, websites, and social media.

Though survey respondents say online sources are more convenient, they indicated a higher level of confidence in getting information through person-to-person interaction. However, home buyers do report using online sources to shop for a home much more often than to shop for a mortgage, according to the survey.



Housing woes spur Bay Area residents to ponder exodus

Housing woes spur Bay Area residents to ponder exodus: poll

The new Berkeley Institute of Governmental Studies Poll determined that 65 percent of the Bay Area’s registered voters and 48 percent of voters in California describe the issue of housing affordability as an “extremely serious” problem.

“Housing is a huge problem in the Bay Area — that is 200 percent true,” said Bob Barksdale, a Lafayette resident who owns a home and has to battle constant traffic jams in the East Bay because skyrocketing home prices have forced so many people into lengthy, challenging commutes.

The poll also found that 51 percent of Bay Area residents have considered moving out of the nine-county region, compared with 56 percent statewide who have considered relocating.

“These are very dramatic findings,” said Mark DiCamillo, director of the Berkeley IGS Poll. “In every region of California, the rising cost of housing has crept into the consciousness of voters.”


August home sales and price report

August home sales and price report

California housing market defies tight inventory as sales and median price propel higher

- Existing, single-family home sales totaled 427,630 in August on a seasonally adjusted annualized rate, up 1.5 percent from July and 1.3 percent from August 2016.
- August’s statewide median home price was $565,330, up 2.9 percent from July and 7.2 percent from August 2016. 
- At the regional level, the San Francisco Bay Area, Inland Empire, and Los Angeles metro area all registered year-to-year sales increases of 6.5 percent, 8.2 percent, and 4.4 percent, respectively.

LOS ANGELES (Sept. 18) – California’s housing market defied gravity as existing home sales and median home price registered increases on both a monthly and an annual basis in August, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today. 

Closed escrow sales of existing, single-family detached homes in California remained above the 400,000 benchmark for the 17th consecutive month and totaled a seasonally adjusted annualized rate of 427,630 units in August, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide sales figure represents what would be the total number of homes sold during 2017 if sales maintained the August pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

The August sales figure was up 1.5 percent from the 421,460 level in July and up 1.3 percent compared with home sales in August 2016 of a revised 422,190. Year-to-date sales are running 2.7 percent ahead of last year’s pace, but have curtailed since the first quarter.

“While August’s strong housing market performance is encouraging, it’s really a tale of two markets. Despite sales growth across all segments of the market, lower-priced homes are particularly inventory constrained, which leads to weaker sales growth, faster rising prices, and fierce competition for the few homes that are listed,” said C.A.R. President Geoff McIntosh. “These homes are selling faster than historically and for top dollar, adversely impacting entry-level buyers who are already struggling to afford to buy their very first home."

The statewide median price reached its highest level in a decade and remained above the $500,000 mark for the sixth straight month. The median price rose 2.9 percent from $549,460 in July to $565,330 in August and climbed 7.2 percent from the revised $527,490 recorded in August 2016. The median sales price is the point at which half of homes sold for more and half sold for less; it is influenced by the types of homes selling, as well as a general change in values.

“A shortage of available homes for sale continues to stoke robust growth in home prices,” said C.A.R. Senior Vice President and Chief Economist Leslie-Appleton-Young. “August marked the third straight month that the median price gained 7 percent or more year-over-year, indicating that prices are not only growing, but are accelerating into the end of the year. For the most inventory constrained segment of the market – the bottom 20 percentile – home prices rose even higher with a double-digit gain (10.7 percent).”

Other key points from C.A.R.’s August 2017 resale housing report include:

• All of the major regions experienced robust month-to-month and annual gains, with Inland Empire jumping 8.2 percent from a year ago, the San Francisco Bay Area rising 6.5 percent, and the Los Angeles metro region increasing 4.4 percent from August 2016.
• San Francisco overtook San Mateo as the most expensive market in the state.
• With consistent home price growth, even the most affordable markets are facing rising prices. California is no longer home to a single county with a median price below $200,000, and only 10 of 58 counties have a median price lower or equal to the national median price of $258,300.
• Statewide active listings continued to decline, dropping 11.9 percent from a year ago.
• With strong sales growth and little new inventory to replenish the housing supply, C.A.R.’s Unsold Inventory Index fell from 3.2 months in July to 2.9 months in August. The index measures the number of months needed to sell the supply of homes on the market at the current sales rate. The index stood at 3.4 months in August 2016.
• Housing supply remained tight throughout the state as every single county in both the San Francisco Bay Area and Southern California saw a reduction in unsold inventory, as did most parts of the Central Coast and Central Valley.
• The median number of days it took to sell a single-family home was 18 days compared with 16 days in July and 28 days in August 2016. 
• C.A.R.’s sales price-to-list price ratio* was 99.5 percent statewide in August, 100 percent in July, and 98.9 percent in August 2016. At the county level, San Francisco had the highest ratio at 114.8 percent and Mono had the lowest at 93.8 percent.
• The average price per square foot** for an existing, single-family home statewide was $268 in August, $270 in July, and $250 in August 2016.
• San Francisco had the highest price per square foot in August at $871/sq. ft., followed by San Mateo ($863/sq. ft.), and Santa Clara ($668/sq. ft.). Counties with the lowest price per square foot in August included Siskiyou and Lassen (both at $129/sq. ft.), Kern ($135/sq. ft.), and Tulare ($136/sq. ft.).
• Mortgage rates declined further in August as the 30-year, fixed-mortgage interest rate averaged 3.88 percent in August, down from 3.97 percent in July but was up from 3.44 percent in August 2016, according to Freddie Mac. The five-year, adjustable-rate mortgage interest rates ticked down in August to an average of 3.15 percent from 3.22 percent in July but was up from 2.74 percent in August 2016.

Graphics (click links to open):
• Calif. historical existing home sales.
• Calif. historical median home price.
• Sales performance by price range.
• Calif. price per square foot.
• Calif. sales to list price ratio.

Note:  The County MLS median price and sales data in the tables are generated from a survey of more than 90 associations of REALTORS® throughout the state, and represent statistics of existing single-family detached homes only. County sales data are not adjusted to account for seasonal factors that can influence home sales.  Movements in sales prices should not be interpreted as changes in the cost of a standard home.  The median price is where half sold for more and half sold for less; medians are more typical than average prices, which are skewed by a relatively small share of transactions at either the lower-end or the upper-end. Median prices can be influenced by changes in cost, as well as changes in the characteristics and the size of homes sold.  The change in median prices should not be construed as actual price changes in specific homes.

*Sales-to-list price ratio is an indicator that reflects the negotiation power of home buyers and home sellers under current market conditions. The ratio is calculated by dividing the final sales price of a property by its last list price and is expressed as a percentage.  A sales-to-list ratio with 100 percent or above suggests that the property sold for more than the list price, and a ratio below 100 percent indicates that the price sold below the asking price.
**Price per square foot is a measure commonly used by real estate agents and brokers to determine how much a square foot of space a buyer will pay for a property.  It is calculated as the sale price of the home divided by the number of finished square feet.  C.A.R. currently tracks price-per-square foot statistics for 39 counties.

Leading the way…® in California real estate for more than 110 years, the CALIFORNIA ASSOCIATION OF REALTORS® ( is one of the largest state trade organizations in the United States with more than 190,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

# # #

August 2017 County Sales and Price Activity
(Regional and condo sales data not seasonally adjusted)

August-17 Median Sold Price of Existing Single-Family Homes Sales
State/Region/County Aug-17 Jul-17   Aug-16   Price MTM% Chg Price YTY% Chg  Sales MTM% Chg  Sales YTY% Chg
CA Single-family (SAAR) $565,330 $549,460 R $527,490 R 2.9% 7.2% 1.5% 1.3%
CA Condo/Townhomes $446,760 $443,160   $419,260 R 0.8% 6.6% 9.7% 1.8%
Los Angeles Metro Area $499,970 $508,810 R $473,300 R -1.7% 5.6% 11.5% 4.4%
Inland Empire $341,340 $344,040 R $316,630 R -0.8% 7.8% 10.8% 8.2%
San Francisco Bay Area $856,200 $898,880   $777,160   -4.7% 10.2% 9.4% 6.5%
San Francisco Bay Area                  
Alameda $867,500 $875,500   $775,000   -0.9% 11.9% 12.9% 6.4%
Contra-Costa  $627,860 $633,250   $570,000   -0.9% 10.2% 16.6% 11.0%
Marin $1,207,120 $1,224,000   $1,200,000   -1.4% 0.6% -15.7% 9.6%
Napa $654,000 $695,000   $625,000   -5.9% 4.6% 5.0% -4.5%
San Francisco $1,380,000 $1,428,000   $1,257,500   -3.4% 9.7% 1.0% 9.7%
San Mateo $1,375,000 $1,500,000   $1,250,000   -8.3% 10.0% 6.1% -7.7%
Santa Clara $1,150,000 $1,165,000   $975,000   -1.3% 17.9% -2.0% 11.9%
Solano $410,000 $420,000   $410,000   -2.4% 0.0% 21.9% -2.5%
Sonoma $625,500 $645,000   $585,000   -3.0% 6.9% 24.2% 8.8%
Southern California                  
Los Angeles $575,130 $573,190 R $524,420 R 0.3% 9.7% 14.8% 3.4%
Orange  $789,000 $785,000   $749,000   0.5% 5.3% 6.1% 0.5%
Riverside  $388,500 $385,500   $355,000   0.8% 9.4% 6.3% 3.3%
San Bernardino $269,950 $266,250   $240,500 R 1.4% 12.2% 18.0% 16.1%
San Diego $605,000 $613,000   $563,000   -1.3% 7.5% 11.0% 4.9%
Ventura $640,000 $648,500 R $609,000 R -1.3% 5.1% 11.4% -0.2%
Central Coast                  
Monterey $580,500 $629,000   $515,000   -7.7% 12.7% 20.0% 9.6%
San Luis Obispo $599,000 $590,000   $535,000   1.5% 12.0% 12.5% 6.1%
Santa Barbara $631,000 $611,000   $775,000   3.3% -18.6% 24.0% 21.9%
Santa Cruz $825,000 $815,000   $824,000   1.2% 0.1% 24.8% -11.6%
Central Valley                  
Fresno $259,000 $258,000   $239,000   0.4% 8.4% 12.5% 13.8%
Glenn $225,000 $205,000   $230,500   9.8% -2.4% -4.8% 42.9%
Kern $235,100 $235,000   $220,000   0.0% 6.9% 4.3% -0.7%
Kings $225,000 $222,000   $209,220   1.4% 7.5% 5.7% 18.1%
Madera $263,500 $279,250   $245,000   -5.6% 7.6% -26.1% -28.6%
Merced $250,000 $260,000   $220,000   -3.8% 13.6% 22.9% 19.3%
Placer $462,000 $453,000   $430,000   2.0% 7.4% 16.3% 12.8%
Sacramento $348,000 $353,000   $323,500   -1.4% 7.6% 5.0% -4.2%
San Benito $600,000 $535,000   $538,380   12.1% 11.4% 28.8% 34.0%
San Joaquin $355,000 $350,000   $325,000   1.4% 9.2% 21.1% 12.0%
Stanislaus $294,290 $297,000   $272,750   -0.9% 7.9% 12.3% 7.8%
Tulare $224,900 $219,950   $204,900   2.3% 9.8% 6.4% 3.6%
Other Counties in California                  
Amador $334,500 $320,000   $257,500   4.5% 29.9% -9.4% 4.3%
Butte  $291,000 $299,900   $264,120   -3.0% 10.2% 4.6% 1.0%
Calaveras $345,000 $324,500   $310,000   6.3% 11.3% 40.0% 8.6%
Del Norte $214,950 $204,900   $174,500   4.9% 23.2% 36.8% 44.4%
El Dorado  $485,000 $480,500   $425,000   0.9% 14.1% 29.2% 9.2%
Humboldt $316,750 $307,500   $290,000   3.0% 9.2% 2.6% -11.1%
Lake $241,500 $265,000   $234,500   -8.9% 3.0% 29.7% -7.7%
Lassen $215,000 $171,000   $185,000   25.7% 16.2% 0.0% -13.8%
Mariposa $280,000 $262,500   $311,500   6.7% -10.1% 45.5% -20.0%
Mendocino $402,500 $370,000   $362,500   8.8% 11.0% -5.3% -15.6%
Mono $386,500 $578,000   $532,500   -33.1% -27.4% -36.8% -50.0%
Nevada $375,000 $398,500   $343,000   -5.9% 9.3% 2.4% -13.4%
Plumas $325,000 $325,000   $275,000   0.0% 18.2% 45.7% 21.4%
Shasta $252,450 $255,000   $248,000   -1.0% 1.8% 12.2% 10.9%
Siskiyou  $212,000 $215,000   $204,500   -1.4% 3.7% 7.0% -11.5%
Sutter $289,000 $280,300   $267,410   3.1% 8.1% 38.6% 18.3%
Tehama $225,000 $206,750   $202,000   8.8% 11.4% 28.1% -19.6%
Tuolumne $292,000 $292,500   $266,450   -0.2% 9.6% 47.8% 18.6%
Yolo $445,000 $426,750   $410,480   4.3% 8.4% 17.6% -9.4%
Yuba $265,000 $266,890   $249,900   -0.7% 6.0% -3.6% -16.5%

r = revised
NA = not available


August 2017 Unsold Inventory and Time on Market
(Regional and condo sales data not seasonally adjusted)

August-17 Unsold Inventory Index Median Time on Market
State/Region/County Aug-17 Jul-17   Aug-16   Aug-17 Jul-17   Aug-16  
CA SFH (SAAR) 2.9 3.2   3.4   18.0 16.0 r 28.0 r
CA Condo/Townhomes 2.2 2.4   2.7 r 14.0 14.0 r 29.0 r
Los Angeles Metro Area 3.1 3.6   3.7   22.0 20.0 r 44.0 r
Inland Empire 3.3 3.7   4.1   25.0 23.5 r 45.0 r
S.F. Bay Area 1.9 2.1   2.5 R 15.0 14.0 r 20.0 r
S.F. Bay Area                    
Alameda 1.6 1.8   2.1   13.0 13.0 r 14.0 r
Contra Costa 1.9 2.2   2.4   13.0 12.0 r 13.0 r
Marin 3.0 2.3   3.6   39.0 31.0 r 39.0 r
Napa 4.6 4.7   4.8   49.5 45.0 r 41.0 r
San Francisco 1.7 1.4   2.2   15.0 15.0 r 25.0 r
San Mateo 1.7 1.7   2.0 r 11.0 11.0 r 14.0 r
Santa Clara 1.5 1.5   2.4 r 9.5 10.0 r 15.0 r
Solano 2.2 2.7   2.8   34.0 31.5 r 38.0 r
Sonoma 2.6 3.3   2.9   37.0 38.0 r 48.0 r
Southern California                    
Los Angeles 2.8 3.3 R 3.3   18.0 17.0 r 40.0 r
Orange  3.1 3.4   3.7   22.0 17.0 r 53.0 r
Riverside  3.2 3.5   4.1   26.0 24.0 r 48.5 r
San Bernardino 3.4 4.0   4.0 r 24.0 23.0 r 38.0 r
San Diego 2.6 2.9   3.3   14.0 13.0 r 17.0 r
Ventura 4.4 5.0 R 4.5 r 46.0 43.5 r 52.0 r
Central Coast                    
Monterey 4.2 5.0   4.9 r 26.0 21.0 r 18.0 r
San Luis Obispo 3.9 4.6   4.4   23.0 16.0 r 31.5 r
Santa Barbara 3.7 4.7   4.6   26.0 25.0 r 32.0 r
Santa Cruz 3.3 4.2   3.0 r 20.0 14.0 r 21.0 r
Central Valley                   r
Fresno 2.9 3.2   3.5   16.0 13.0 r 20.0 r
Glenn 4.2 3.5   6.9   47.5 17.0 r 22.5 r
Kern 3.3 3.4   3.8   19.0 18.0 r 23.0 r
Kings  2.4 2.9   3.2   21.0 28.0 r 19.5 r
Madera 4.9 3.8   4.1   33.0 30.0 r 51.0 r
Merced 2.6 3.2   2.8   15.0 13.0 r 34.0 r
Placer  2.5 2.9   3.0   14.0 11.0 r 17.0 r
Sacramento 2.4 2.3   2.5   11.0 9.0 r 12.0 r
San Benito 2.6 3.5   4.2 r 28.0 23.5 r 21.5 r
San Joaquin 2.5 2.9   3.1   14.0 13.0 r 15.0 r
Stanislaus 2.4 2.8   3.1   14.0 12.0 r 15.0 r
Tulare 3.7 3.8   3.5   23.0 24.0 r 25.0 r
Other Counties in California                    
Amador 6.0 5.2   5.8   39.0 32.0 r 47.0 r
Butte  2.5 2.7   3.3   17.5 11.0 r 21.5 r
Calaveras 4.8 6.8   4.9   27.5 38.5 r 30.0 r
Del Norte 7.2 9.5   9.6   90.5 94.0 r 117.5 r
El Dorado  3.5 4.7   3.8   38.0 27.0 r 34.0 r
Humboldt 4.9 4.8   3.3   19.0 14.0 r 16.0 r
Lake  5.1 6.5   4.6   24.0 34.5 r 92.5 r
Lassen 8.1 7.5   NA   91.0 70.0 r 85.0 r
Mariposa 4.8 7.6   4.3   66.5 32.5 r 82.5 r
Mendocino 6.6 6.2   6.0   66.0 71.0 r 72.5 r
Mono 9.2 6.0   6.5 r 74.0 93.0 r 95.0 r
Nevada 3.9 4.3   3.3   19.0 18.0 r 23.0 r
Plumas 8.0 11.5   10.3   94.0 99.0 r 94.5 r
Shasta 4.1 4.6   4.5   21.0 21.0 r 34.0 r
Siskiyou  6.9 7.2   6.0   52.0 40.0 r 37.0 r
Sutter 2.8 3.6   2.8   21.0 14.0 r 15.0 r
Tehama 6.4 7.4   4.7   60.0 48.5 r 47.0 r
Tuolumne 4.4 7.0   5.4   29.0 30.5 r 42.5 r
Yolo 2.4 2.9   2.1   13.5 10.0 r 15.0 r
Yuba 3.0 2.8   2.4   13.0 12.5 r 13.0 r

 r = revised
NA = not available


Live in Silicon Valley? Check out this new first-time homebuyer grant | 2017-09-08 | HousingWire

Live in Silicon Valley? Check out this new first-time homebuyer grant | 2017-09-08 | HousingWire

First-time homebuyers in the infamously tough California housing market are in luck thanks to a new closing cost grant from local Realtors.

The Santa Clara County Association of Realtors and the Silicon Valley Association of Realtors secured a $100,000 grant from the California Association of Realtors Housing Affordability Fund to financially aid first-time homebuyers in the area.

Through the grant, first-time homebuyers will be eligible for awards of up to $5,000 per grantee for customary non-recurring closing costs paid by the buyer.

Plus, the Santa Clara County Realtor Foundation and the Silicon Valley Realtor Charitable Foundation are contributing the necessary operational funds to implement the grant. The Housing Trust Silicon Valley is the administrator for this program.

This is welcomed news for a housing market that is consistently one of the most unaffordable in the country.

In Silicon Valley, especially, HousingWire previously covered a story about how even a housing official in Silicon Valley couldn’t afford to live there. Needless to say, the market is tough.

"I've seen many young families say they just can't make it work here and we end up losing folks to areas where they can purchase that starter home," said Rick Smith, president of SCCAOR. "This closing cost grant can make the difference for buyers just on the edge of affordability."

While there are three requirements to get approved for the grant, two of the requirements shouldn’t be too difficult to adhere to.

Buyers looking to qualify need to meet these three standards before applying:

  • They must use a Realtor in the transaction
  • They must be considered a first-time homebuyer under federal tax rules
  • They must meet the income requirement of earning up to 120% of area median income.

"We must address the housing needs of hardworking families who live in our communities," said Denise Welsh, president of SILVAR. "This program will aid first-time homebuyers in their efforts to attain homeownership."



Don’t Disqualify Yourself… 52% of Approved Loans Have A FICO® Score Under 750 | Real Estate with Michael Devlin

Don’t Disqualify Yourself… 52% of Approved Loans Have A FICO® Score Under 750 | Real Estate with Michael Devlin

Don’t Disqualify Yourself… 52% of Approved Loans Have A FICO® Score Under 750 | Simplifying The Market

Don’t Disqualify Yourself… 52% of Approved Loans Have A FICO® Score Under 750

The results of countless studies have shown that potential home buyers, and even current homeowners, have an inflated view of what is really required to qualify for a mortgage in today’s market.

One such study by the Wharton School of Business at the University of Pennsylvania revealed that many millennials have not yet considered purchasing homes simply because they don’t believe they can qualify for a mortgage.

A recent article about millennials by explained that:

About 72% of aspiring millennial buyers said they’re waiting because they can’t afford to buy…

The article also explained that 29% of millennials believe their credit scores are too low to buy.The problem here is the fact that they think they will be denied a mortgage is keeping them from even attempting to apply.

Ellie Mae’s Vice President Jonas Moe encouraged buyers to know their options before assuming that they won’t qualify for a mortgage:

“Many potential home buyers are ‘disqualifying’ themselves. You don’t need a 750 FICO® Score and a 20% down paymentto buy.”

So, what credit score is necessary?

Below is a breakdown of the FICO® Score distribution of all closed (approved) loans in July from Ellie Mae’s latest Origination Report.

Don’t Disqualify Yourself… 52% of Approved Loans Have A FICO® Score Under 750 | Simplifying The Market

Over 52% of all approved loans had a FICO® Score under 750. Many potential home buyers believe that they need a score over 780 to qualify.

Bottom Line

If owning a home of your own has always been your dream and you are ready and willing to buy, or if you are a homeowner who wants to move up, find out if you are able to! Let’s get together to determine if your dreams can become a reality sooner than you thought!


San Francisco’s most and least expensive homes this week – Curbed SF

San Francisco’s most and least expensive homes this week - Curbed SF

Friday is time for the High & the Low, a Curbed column chronicling the most and least expensive homes sold in San Francisco in the last seven days. Here’s this week’s pageant of extremes.

Perched on a Cow Hollow hillside like a gleaming white block of glacial ice deposited right into the middle of San Francisco, the circa 1928 building at 2100 Green makes quite a statement.

And in this case that statement is, “I know I’m worth a ton of money these days.” It’s one thing that the two-bed, two-bath co-op condo marked number 406 listed for $2.95 million back in June. That extraordinary sum is really perfectly normal in the context of the neighborhood.

The remarkable thing is that this was a price hike from its earlier spring listing of $2.75 million. Guess it pays to know what you’re worth—or at least to trend upward when trying to make an educated guess—because that condo is indeed the priciest sale in the city this week, at least among those homes publicly listed.

Back in 2011 when this same home listed most recently, the ads emphasized the building’s glorious tile floors, millwork, and stained glass, plus home details like the “limestone slab mantelpiece” over the fire and “backsplashes of subway-set, beveled-edge limestone.”

The pitch this time around was much more straightforward, referencing only the “amazing workmanship” but leaving the details to speak for themselves. It seems it did the trick though, as the final price came out to more than $3.17 million, up from that $2.19 million sale in 2011.


Study: The income needed to buy a home in the Bay Area has doubled in five years

Study: The income needed to buy a home in the Bay Area has doubled in five years - SFGate

The most arresting data point in a new report from the California Association of Realtors reveals that the income needed to buy a median-priced single-family home in the Bay Area has nearly doubled in five years.

Back in 2012, a minimum annual income of $90,370 was needed to purchase a Bay Area home at the median price of $447,970. Now, a home buyer needs to be bringing in $179,390 to afford a mean-priced house at $895,000, the report looking at second-quarter 2017 home sales data concludes.

This reality of skyrocketing real estate prices might seem rather unfair to those of us who haven't seen our salaries shoot through the roof. If you're trying to save for a home, it can be difficult to keep up with the rising prices unless you're receiving significant raises at work.

Before you house-hunt, you've got to answer two questions. How much house can you afford, and how much house should you actually buy?

Media: Money Talks News

And even if you do achieve that golden salary of $179,390, don't expect it to get you anything within San Francisco city limits where the median-priced home costs a staggering $1.45 million and requires a salary of $290,630.


 In fact, according to the report, only 12 percent of buyers in the city can actually afford a median-priced single-family home.


Pocket Listings may short-change sellers

Pocket Listings may short-change sellers (sponsored) - SFGate

The fast pace of Bay Area real estate, where homes are snapped up as soon as they hit the market, is fueling an interesting trend: pocket listings, homes not listed on a Multiple Listing Service (MLS), are on the rise.

An off-MLS listing strategy may seem appealing on the surface – your agent sells your house quickly to a buyer he or she already knows about without having to inconvenience you with excessive showings. But sellers beware.

The MLS provides tremendous exposure for your home. Properties on the MLS are immediately available to nearly 200,000 real estate professionals throughout California and their clients. Plus, they are automatically shared with online consumer portals, like, Redfin, and Zillow (unless you request otherwise).


By limiting your property to your agent and a buyer he or she may have in mind, you'll never know if you're getting the most money possible in the sale. By limiting exposure of your home you're also limiting the number of prospective buyers. In fact, MLSListings data shows that homes listed on the MLS sell for 30% higher, on average, than those sold off the MLS.