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You are here: Home » 2014 » August

CONTINGENT OFFERS

I’ve let you know that the number of homes for sale is up. This is welcome news to home buyers that now finally have a little more to choose from. It also appears to be having a minor chilling effect on home prices which are flattening out right now, which is also good news for home buyers that were worried they were going to be priced out of the market again. There is another group that this is good news for, and that is contingent buyers, those that need to sell a home in order to buy.

Now, before you get TOO excited, contingent offers are still very tough to get accepted. But at least now some home sellers will at least consider them. The last few years it literally wasn’t even hardly worth the time to write up an offer to buy a home if the buyer needed to sell their home first. There were just so many cash and or non-contingent buyers with 20% or more down payment that the contingent buyers didn’t stand a chance.

What hasn’t changed is that if you need to sell your home, and it isn’t even on the market yet, then it’s still going to be very difficult to get an offer accepted. Your odds will improve if you already have a buyer for your home in contract. Your odds go up even more if all the inspections and appraisal have been completed, and all contingencies are removed. If that is your situation, then there are a lot of sellers that will look at your offer seriously, although as soon as a similar non-contingent offer comes along they’ll likely take that one! Oh, and be VERY, VERY careful about accepting an offer from a buyer who then needs to sell their home. That will make it even more difficult and complicated for you to buy your next home until everything closes. I’ve done it in the past, but you certainly put yourself in a poor negotiating position when you write an offer if several escrows need to close first!

WHAT IF INVENTORY KEEPS CLIMBING?

The number of homes for sale is rising. It is still historically low, but on a percentage basis, it’s a remarkable increase. So far it doesn’t appear to be hurting the market too much, although now that buyers have a little more to choose from, the multiple-offer-bidding-wars seem to have calmed down.

Inventory in Brentwood has almost doubled since the first part of the year. What if it doubles again? What if it keeps going up, up, up? Are we in for another crash? My guess would be no. (Although that’s assuming we don’t have a “black swan” event like a terrorist attack on US soil, stock market plunge, interest rates going to 15%, etc.)

The last time we saw inventory spike back in 2005-2006, the real estate market was VERY different than it is now. Many homeowners owed as much or more than what their home was worth, and they really couldn’t afford their payment. However, since values had been skyrocketing, they found a way to make that payment. But when home values stopped appreciating, and then dropped a bit, lots of people put their homes on the market, and started dropping their prices quickly because they HAD to sell, and they were usually a short sale, so they thought it was the “banks’ money” anyways.

This time, many buyers paid cash the last few years, or if they got a loan, the mortgage payment is affordable. And many of these people bought at 20-40% less than what homes are worth today. So my thought is that if inventory does continue to increase, and prices do soften, many of these sellers will simply take their property off the market, because they can afford the payment, and they don’t HAVE to sell. I’m guessing many are selling just BECAUSE prices are up, but if they can’t get their price, they won’t sell.

WHO WANTS SUPER-FAST INTERNET?

You may have seen some of the signs up around town already. Sonic is coming to Brentwood in spring 2015, and, no, not the fast food chain!

Sonic is a internet and phone provider, but they are not your normal provider. Their internet cables transfer up to 100 times faster than regular copper and coaxial cable. That’s why they are calling it Gigabit Fiber Internet.

The good news is that you can get internet and home phone for only $40 a month.

The bad news is that not everyone can get this service. Sonic only wants to focus on those neighborhoods where a lot of people will sign up. To gauge the interest, they have set up a website where you can log your interest, and the neighborhoods with the most responses will get their service first. Some neighborhoods already have the right conduit installed, which will put them at the top of the list, but even if your neighborhood doesn’t have it, if enough of your neighbors express interest, Sonic may go ahead and put the conduit in.

The website is http://sonic.net/b1. Log in and register your interest, and then pass on to your friends and neighbors.

By the way, I get nothing from Sonic for this plug. I just thought this is something many of you would be interested in, and it would actually help Brentwood home values if the whole town had this!

BRENTWOOD = SEAHAVEN?

Seahaven is a fictional town from the movie, “The Truman Show” that came out in 1998. The whole town was built in a dome and then staffed with actors to convince the main character, Truman, that it was all real. They didn’t want Truman to ever attempt to leave, so Seahaven was continually voted as “Best Place to Live” and this fact was trumpeted to Truman every chance they got.

Well, the City of Brentwood was recently named as the best city in California for homeownership! No, really! This is a real award. (And no, you aren’t living in a reality show unbeknownst to you. At least, not all of you!)
There is a consumer advocacy website called Nerd Wallet that ranks cities as best for job seekers, best for young families, etc. One of their categories is for homeownership. They look at three factors. 1. Are homes available? 2. Can you afford to live there? 3. Is the area growing?
If you’ve tried to buy a home here the last few years, you may disagree with factors #1 and #2 above. However, Nerd Wallet looks the % of homeowners to renters to factor if homes are available, not how many homes are actually for sale. They figure that if most of the properties are owned by landlords, that means it’s too hard for owner-occupant buyers to buy a home. Around 75% of Brentwood homes are owner-occupied, which is considered a good sign for this ranking. In regards to affordability, even though our prices have risen drastically the last few years, we are still very affordable compared to the high-priced communities to the west of here as you get closer to the major job centers.

INVENTORY IS INCREASING

For the last few years we’ve had very few homes for sale in East County. Low inventory, coupled with high affordability (house prices compared to income), has lead to big increases in prices the last 18 months or so. I keep an eye on inventory levels on almost a daily basis, and lately they’ve been increasing.

In Brentwood we started the year with less than 80 resale homes on the market, and as I write this article we are at almost 150. That is over a 90% increase in homes for sale. Oakley and Discovery Bay are less dramatic at around a 40% increase in homes for sale.

Before you get too concerned that the “bubble” is popping, let me put this into a bit of perspective. Historically these are still VERY low numbers for inventory for our area. At one point after the mortgage meltdown happened we had over 600 homes for sale in Brentwood alone. Also keep in mind that East County’s population is growing again, so we SHOULD have more homes on the market because there are more homes here then there were 10 years ago.

I think the main reason for this increase in inventory is the recent rise in prices. I believe there were a LOT of people that would have liked to have moved the last few years, but couldn’t because they were either upside-down in their homes, or just couldn’t get enough equity out of their home to make the next move work for their situation. There are also a lot of people that bought homes from 2010-2012 at “the bottom” of the market who are looking to cash in on those gains.

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