Another busy week last week in the south Santa Clara County area of Morgan Hill, San Martin and Gilroy.  There were 43 residences that went from active to pending status.  Of these, 41 were single family homes and 2 were condo/townhouses.  This past week there were more sales in the higher price ranges than compared to some of the previous weeks.  For comparison, look at my previous weekly posts on Wednesdays.

Of these sales, the list price ranges were:

Below $200,000 = 1 sale (2% of total)

$200,000 - $500,000 = 22 sales (51% of total)

$500,000 - $800,000 = 12 sales (28% of total)

$800,000 - $1,200,000 = 5 sales (12% of total)

$1,200,000 - $2,000,000 = 3 sales (7% of total)

As of October 28, 2008, there are 730 residential listings active on the market in the Morgan Hill, San Martin, Gilroy area, and 252 pending residential listings.  Therefore, 26% of the listings are pending under contract as of this date.

Tune in next week for an update on the number of sales in South Santa Clara County!

1. Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, your property taxes, as well as some of the costs involved in buying your home.

2. Appreciation. Real estate has long-term, stable growth in value. While year-to-year fluctuations are normal, median existing-home sale prices have increased on average 6.5 percent each year from 1972 through 2005, and increased 88.5 percent over the last 10 years, according to the NATIONAL ASSOCIATION OF REALTORS®. In addition, the number of U.S. households is expected to rise 15 percent over the next decade, creating continued high demand for housing.

3. Equity. Money paid for rent is money that you’ll never see again, but mortgage payments let you build equity ownership interest in your home.

4. Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.

 5. Predictability. Unlike rent, your fixed-mortgage payments don’t rise over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will increase.

6. Freedom. The home is yours. You can decorate any way you want and benefit from your investment for as long as you own the home.

 7. Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity. Online resources: To calculate whether buying is the best financial option for you, use the “Buy vs. Rent” calculator at http://www.ginniemae.gov/.

South Santa Clara County has some extreme price differentials going on these days.  A few years ago, I never thought we’d see a single family home priced below $200,000 again.  And we still have some high quality estates priced in the several millions range.  Here are South County’s least expensive single family home and most expensive home on the market today.

The least expensive home shown above, 7450 Rogers Lane in Gilroy, is a bank-owned property that has been on the market for over a year.  It is a two bedroom, two bathroom fixer-upper priced at $175,000 and is 1204 sq. ft. on a 3483 sq. ft. lot.  This home sold in March of 2003 for $321,000.

On the opposite end of the price range is 2400 McDonald Lane in Morgan Hill.  This lovely home is priced at $4,350,000 and was built 8 years ago.  It is a 7550 sq. ft. home with 6 bedrooms and 5 1/2 bathrooms sitting on 21 acres in the hills east of town.  There are many amenities that add to the value of this home.

In addition to these two homes, there are another 664 single family residences actively listed in the south County that are priced between these two extremes!

I work at the very first Intero Real Estate Services office to open back in 2002.  Before this office opened, many of us had worked together previously in Morgan Hill, and so we all moved in together into what was a thriving office from day one.  We opened  the Morgan Hill branch of Intero on October 22, 2002.

There are now over 60 offices in several states and countries.  And, in just 6 years of being in business, on October 22, 2008, there is a good possibility that we will arguably have #1 market share in Santa Clara County - The largest county in Northern California.

Our Intero office has always had the largest share of the real estate market in Morgan Hill.  And soon we’ll be able to make the same claim about Santa Clara County.  Click on the thumbnail graph below:

Residential sales were up 58% from last week in the south Santa Clara County area of Morgan Hill, San Martin and Gilroy.  There were 40 residences that went from active to pending status.  Of these, 33 were single family homes and 7 were condo/townhouses.  This week marks the first week that I’ve had the “below $200,000 price range” as a category for price ranges.

Of these sales, the list price ranges were:

Below $200,000 = 4 sales (10% of total)

$200,000 - $500,000 = 24 sales (60% of total)

$500,000 - $800,000 = 8 sales (20% of total)

$800,000 - $1,200,000 = 3 sales (7.5% of total)

$1,200,000 - $2,000,000 = 1 sale (2.5% of total)

As of October 21, 2008, there are 741 residential listings active on the market in the Morgan Hill, San Martin, Gilroy area, and 243 pending residential listings.  Therefore, 25% of the listings are pending under contract as of this date.  We’ve managed to stay at this ratio of roughly 25% for the past 6 weeks.

Tune in next week for an update on the number of sales in South Santa Clara County!

Morgan Hill is full of people with Italian ancestry, and several of them work in our office.  Today we celebrated our 14th annual Italian Day at the office.  Gino Blefari, Intero’s founder, president and CEO, visited along with several branch managers and vice presidents.  We had such stomach stretching delights as homemade meatballs, lasagne, cannelloni, and biscotti served along with local Guglielmo wines.  For entertainment there was ring tossing to win bottles of champagne and, of course, the infamous olive pit spitting contest!

                             

RealtyTrac, an online foreclosure marketplace, contains nationwide foreclosure information and is a good source for finding out what is happening with distressed properties locally.  RealtyTrac shows that Gilroy currently has 446 bank-owned properties and 295 pre-foreclosure properties (one where the owner has received a Notice of Default.)  As a comparison, Morgan Hill has 154 properties that are bank-owned and 163 pre-foreclosure properties.  So, all-in-all, Gilroy has 424 more properties that are in some stage of foreclosure than does Morgan Hill.  These include commercial properties, but the vast majority are residential.  Even San Martin has their fair share of bank-owned homes.  According to RealtyTrac, there are 154 bank-owned properties in that small community.

                                                  

However, both Gilroy and Morgan Hill are seeing a majority of the sales that are occurring are “financially distressed” sales, meaning either bank-owned or short sales.  See my blog post from September 8th for the description of short sales and bank-owned properties:  http://southcountyrealestatetoday.com/2008/09/08/a-brief-primer-on-distressed-properties/

The Multiple Listing Service shows that in the past month, there were 77 residential listings in Gilroy that went under contract.  Of those that did, 58 were either bank-owned or short sales.  In other words, just over 75% of the recently sold homes in Gilroy were financially distressed.

And in Morgan Hill, there were 40 residential listings that went into contract in the past month.  Of those, 27 were either bank-owned or short sales.  That would be just over 67% of the recently sold homes in Morgan Hill that were financially distressed.  Still a very high number.

And, finally, San Martin has had two sales in the past month - both were short sales.

Yesterday, Morgan Hill’s City Manager, Ed Tewes, spoke at our weekly South County Realtors Association.  I reported on Mr. Tewes’ previous update to our Association from this past July in this post:  http://southcountyrealestatetoday.com/2008/07/26/update-from-morgan-hills-city-manager/.  With the upcoming election, Mr. Tewes touched on the two local measures that will be on the ballot, but first he spoke about upcoming development in the city.

The projects slated for development in Morgan Hill which he mentioned have already opened or are very close to opening.  These include two new restaurants opening downtown.  (The rumor I’ve heard is that Maurizio is developing both of these restaurants….)  He also mentioned that the shoe store, DSW has opened in the new Cochrane/101 shopping center.  (Can my closet fit any more shoes??)

The first ballot issue Ed Tewes discussed was Measure H, which would provide an exemption for 500 downtown housing units.  Everyone has something nice to say about Morgan Hill’s charming and attractive downtown, but most people also have reservations about the health of the commercial enterprises there.  Measure H would expand the number of residential units downtown and bring a new vitality to the 20-block area.  In order to do this, Morgan Hill’s Residential Development Control System (RDCS) has to be modified but will still meet strict requirements while also meeting Morgan Hill’s population ceiling.  I am voting “YES” on Measure H.

The other ballot measure is Measure G, which would establish a 2% utility tax.  The monies would be used to hire additional police force.  I have not made up my mind how I’m going to vote on Measure G and I’m going to do a little more research.

Roadways slated for development in the next few years:  1.  Tennant Avenue will be widened at the 101 overpass from 2 lanes to 4 lanes and the interchange will be a cloverleaf.  2.  Butterfield Boulevard will extend south from Tennant Avenue, curving so that it will meet Watsonville Road at Monterey Avenue.  3.  Santa Teresa Boulevard will be built from the south end of Hale Avenue/Main Avenue, curving through residential areas, and dead-ending into DeWitt Avenue near Spring Avenue.

Ed Tewes also reminded us of the Morgan Hill’s housing element update which will be discussed at a public meeting tonight at the CCC at 6:45 p.m.   Every five years, the city is required by the state to update the housing element.  Some of the issues to be discussed will be Below Market Rate units and the unbuilt housing units that have already been approved in previous RDCS competitions.

I don’t know if it was the uncertainty and fear of the economic turmoil last week or the typical Fall slow down in the market, but we had slow sales week in the south Santa Clara County area of Morgan Hill, San Martin and Gilroy.  My money is on economic concerns and their paralyzing effects.  There were 17 residences that went from active to pending status.  Of these, 16 were single family homes and 1 was a condo/townhouse.

Of these sales, the list price ranges were:

$200,000 - $500,000 = 8 sales (47% of total)

$500,000 - $800,000 = 7 sales (41% of total)

$800,000 - $1,200,000 = 2 sales (12% of total)

$1,200,000 - $2,000,000 = 0 sales

As of October 14, 2008, there are 739 residential listings active on the market in the Morgan Hill, San Martin, Gilroy area, and 234 pending residential listings.  Therefore, 24% of the listings are pending under contract as of this date. 

Tune in next week for an update on the number of sales in South Santa Clara County!

The tax deductions you’re eligible to take for mortgage interest and property taxes greatly increase the financial benefits of homeownership.   Here’s an example of how it works.

Assume: $9,877 = Mortgage interest paid (a loan of $150,000 for 30 years, at 7 percent, using year-five interest)
Plus $2,700 = Property taxes (at 1.5 percent on $180,000 assessed value)
$12,577 = Total deduction

Then, multiply your total deduction by your tax rate. For example, at a 28 percent tax rate: 12,577 x 0.28 = $3,521.56

$3,521.56 = Amount you have lowered your federal income tax (at 28 percent tax rate)

Note: Mortgage interest may not be deductible on loans over $1.1 million. In addition, deductions are decreased when total income reaches a certain level.

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Gretchen Merrick Phone:408-892-9015 gmerrick@interorealestate.com Featured Listings 16830 Edwin Jones Court Morgan Hill, CA 4 BR | 3 BA $749,000 More Details 16868 De Witt Ave Morgan Hill, CA 6 BR | 4.50 BA $849,999 More Details

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