Some of you may have noticed my blog
which is now featured in the Real Estate News section of Realtor.com, the official site of the National Association of Realtors.
Here are some further insights behind each real estate trend with which most of you should be familiar if you have been reading my San Jose blog over the past few weeks.
1. Everyone in Silicon Valley is talking about Linkedin, Pandora and the upcoming IPOs of Facebook, Zynga and other hot startups. The reality is that only a few people get really rich in the course of these IPOs, namely the founders and mostly the VCs who invested in the early days. Most employees receive a fair compensation based on the numbers of years they have been working at the company and their stock allocation. In other words, outside of a few selected high ranking employees, founders and VCs, most employees make decent money, but nowhere near what you might think and certainly not enough to buy cash a $3m home in the exclusive Silicon Valley neighborhoods. Besides, most of the new generation of tech entrepreneurs could not care less about showing off their wealth. As the LA times outlines it, "Silicon Valley measures achievement by what entrepreneurs build, not what they buy". So, while it is true that we are seeing an emerging trend (in Palo Alto in particular), the foam has yet to become a wave.
2. Downward pressure on home prices in Silicon Valley is definitely felt every time a new REO home is brought to the market by lenders. And there is plenty more to come. As I told
David Louie from ABC News a few weeks ago, REOs are back on the San Jose market, split equally between condos and single family homes currently. The share of REO condos for sale in San Jose is 3 times greater than the ratio of REO Single family homes. As we all know unfortunately, the condo market in San Jose got hit particularly hard over the past 3 years. A drop in prices/value of up to 50% for some condos is not uncommon!
3. Short Sales are here to stay and will rise in spite of the recent statistics which outlined a decline in short sales. In my opinion, this is mostly a technical slowdown due to compliance efforts on the part of the lenders. The million dollar question is whether more short sales will be approved in the coming months vs. REOs repossessed by banks. This is worth probably an entire blog...
4. Investors, both national and international, but mostly private individuals, are snapping Silicon Valley and San Jose homes at a frenetic pace. Just today, I was made aware that a TLC home for sale under $200K received 11 offers, mostly in cash, and will probably sell above listing price. Nobody beats cash with closing in 15 days!
5. The come-back of First Time Home Buyers will happen in the next coming months. Young people and low income families will probably focus on East Bay neighborhoods and "foreclosurevilles" providing they can be qualified. As prices are expected to decrease until the rest of the year, they will move where the deal is.
© Sophia Delacotte CDPE, SFR, CHS
San Jose Realtor
Cell: (408) 717-2575