From The Heart Of Silicon Valley

Wow prices dropping everywhere…even in gas!  If you follow a gasbuddy.com…you’ll see this:

Interest rates on jumbos…did you know about the changes to the High Balance Conforming Limit???:

Attached are copies of the slides from Wells Fargo. Here is some information buyers should be aware of, and great details for sellers (they need to be aware of how this impacts the potential buyers considering to buy their home).
Here are the points:

The Current High Balance Conforming Limit Expires December 31st, 2008
Loans Must be Funded and Recorded by/on December 31st, 2008
The Santa Clara County High Balance Conforming Loan Limit is currently $729,750
After December 31st, the Conforming Limit will be 150% of the Standard Conforming Loan Limit with a maximum limit of $625,500
The 60 day lock on the High Balance Conforming Limit – must lock by October 31, 2008
The 30 day lock on the High Balance Conforming Limit – must lock by December 1, 2008
Some Lenders are requiring these High Balance Conforming Limits be closed earlier than the December 31st date
Private Mortgage Advisors will fund and record loans up to December 31st, 2008

highbalance-conforming_1021081

The simply Laws of supply and demand seem to always bump against a lot of variables.  Among them of course is human psychology.  Let’s look at twhats going and has gone on in Campbell residential real estate for the last 5 years (click on thumbnail to scale, click again to scale back).

The number of houses for sale (inventory) are crazy sky high, compared with whats sold and what was for sale in the past five years.   Okay…we all know the housing market sucks right now, there is a lot of fear and the easy money credit days are gone.   Its been predicted for years, this house bubble pop.   The graph is not directly about the bubble, but that’s because it has nothing to do with prices …its simply two data points, supply vs demand.

Well, supplies are crazy high, so even if you didn’t take economics 101, common sense tells you prices should be going crazy down, right?

2) 5 Year Average Price per Sqft. Report

Nope.  Data (Fig. 2) says the buyers that are buying are paying basically the same or more. Huh?  But supply (the number of homes for sale) are sky high.  Whats going on?  This chart is skewing reality (like all charts can ,  the few people that can afford, willing  and need to buy a great home now (not necessarily an investment) will pay whatever.

In other words, the home market has its own reality outside of supply and demand, but in the long run, asking prices must come down, right?  Again, supplies are sky high.  That doesn’t include how many sellers gave up and are hoping the market changes, that current have their home off the market (more trend charts on that later).

Ok, so again, sellers should be getting real, supplies sky high, prices are dropping like crazy right now, right?

3) Campbell Average Price For Sale & Sold

Nope, (fig 3) business as usual.   Asking prices and Sold prices are staying the same.   If it was a buyers market, like the law of supply and demand says it should be, that red line would be way below list prices…and overall, bringing down with is the asking prices, like an weight on a bait.   It is sort of, in the last few months king of trending downward, but it doesn’t reflect that the number of houses on the market are crazy high.  Forget all those “Just Reduced” signs, they most don’t mean much relatively, and most buyers know it.

So reality is reality, and if I am a seller, I think I have look beyond the few comparable houses sold now and the near past, beyond what others are asking, and simply look at what the market will pay now for your house…

Pricing competively means just that, and very few sellers are doing it.  Realtors are scared to tell them the reality I also guess…but the laws are laws…price it right now if you need to sell to sell now.   Get  Realtor that is a Realist.  Otherwise your days on market, i.e., your wasted days and time, will also go up with the supply.  Unless, again, you decided to take it off the market, and thats another interesting trend I look at next post…