The number of residential sales was down last week compared to the large numbers we have been seeing so far this year in the south Santa Clara County towns of Morgan Hill, San Martin and Gilroy.  There were 30 residences that went from active to pending status as compared to 47 last week.  Of all the sales last week, 27 were single family homes and 3 were townhouses/condominiums.  70% of the sales were priced below $500,000.

Of these sales, the list price ranges were:

Below $200,000 = 1 sale (3.3% of total)

$200,000 - $500,000 = 21 sales (70% of total)

$500,000 - $800,000 = 6 sales (20% of total)

$800,000 - $1,200,000 = 1 sale (3.3% of total)

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

As of February 22, 2009, there are 564 residential (single family homes and condos) listings active on the market in Morgan Hill, San Martin and Gilroy.  There are currently 284 pending residential listings.  Therefore, 33% of the total listings are pending under contract as of this date.  Many of the pendings are short sales and therefore take a long time to close.  This could keep our pending percentage up artificially high. 

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

Several times in the past (July, 2008 and October, 2008) I have written about Morgan Hill’s City Manager speaking at our Wednesday morning South County Realtors Association meetings.  Ed Tewes does an excellent job on updating us on the current issues affecting Morgan Hill and environs.  As would be predicted, the number one topic was how Morgan Hill is braced to handle the existing economic recession.

 Mr. Tewes began with the good news.  Although the Santa Clara Valley Water District had been on the brink of enforcing mandatory water conservation, it appears that we may escape that restriction as the latest rainfall brings us much closer to the seasonal normal amount.  However, that doesn’t allow us to water with impunity, don’t forget.

One of the questions that the city is mulling over that is of interest to many citizens is whether there should be a movie theater downtown.  We have an excellent multi-plex at Tennant Station that should serve the city’s needs.  The City Council is considering a downtown cinema, but not at the old Granada Theater site.  The new structure would be at the corner of 2nd Street and Monterey Road.  My personal opinion is that we shouldn’t stretch our entertainment dollars too thin and shouldn’t over-leverage our tax dollars by constructing a new theater downtown.

The City Manager’s brief presentation then focused on the four areas the City Council was currently considering:

• Capturing new regional economic growth:  be prepared to attract future growth by investing in our infrastructure and redevelopment
• Focus on the downtown corridor:  subsidize growth and use redevelopment monies
• City Council workings:  should all council-members participate in policy workshops rather than sub-committees?
• Ongoing economic issues:  how should the city deal with the revenue reduction due to no development fees, lower property taxes, transfer taxes, and sales taxes

The City Manager stated an interesting fact regarding development fees and why there were currently none being collected.  For the past 6 months, there have been no new construction building permits pulled in Morgan Hill.  This is a record.  (As an aside, previously I was a civil engineer and was the Morgan Hill plan check engineer for a brief period.  Although I’m sure there are currently tenant improvement permits, remodel permits, and a host of other types of building permits being applied for, it’s hard to fathom no new construction permits.)

The last topic Mr. Tewes covered is how Morgan Hill was handling the economic crisis.  There have been staff layoffs and compensation reduction.  An interesting turn of events is that the City of Morgan Hill and the City of Gilroy are meeting to discuss ways to share costs and services.  The cities will be considering regional fire and police protection as well as shared environmental and recreation programs.

Another very busy week of sales in south Santa Clara County last week.  With the new federal stimulus package approved in congress, buyers may be feeling encouraged.  Investors should take heart in that the number of property loans they will be allowed to hold will increase from 4 to 10 beginning March 1, 2009.  First-time buyers also received good news.  The first time buyer credit was increased from $7500 to $8000 and it is to be a true credit and not an interest free loan to be paid back over 15 years. 

The number of residential sales increased again in the south Santa Clara County towns of Morgan Hill, San Martin and Gilroy.  There were 47 residences that went from active to pending status as compared to 44 last week.  Of all the sales last week, 44 were single family homes and 3 were townhouses/condominiums.  68% of the sales were priced below $500,000.

Of these sales, the list price ranges were:

Below $200,000 = 2 sales (4% of total)

$200,000 - $500,000 = 32 sales (68% of total)

$500,000 - $800,000 = 8 sales (17% of total)

$800,000 - $1,200,000 = 4 sales (9% of total)

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

As of February 15, 2009, there are 561 residential (single family homes and condos) listings active on the market in Morgan Hill, San Martin and Gilroy.  There are currently 281 pending residential listings.  Therefore, 33% of the total listings are pending under contract as of this date.  Many of the pendings are short sales and therefore take a long time to close.  This could keep our pending percentage up artificially high. 

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

When serving real estate buyers, the question of which school the residents of a particular home at a particular address would go to often comes up.  Although I feel I know the school boundaries pretty well, I don’t like to rely on my own knowledge in case the boundaries have changed, which they occasionally do.  I go online to find the answer.

The southern portion of Santa Clara County is home to two school districts:  Morgan Hill Unified and Gilroy Unified.   Morgan Hill’s school district covers a large area.  From the MHUSD website,

“The Morgan Hill Unified School District encompasses nearly 300 square miles and serves the ethnically diverse population of Morgan Hill, San Martin, portions of San Jose, and unincorporated areas of the county. We are comprised of 15 schools: nine elementary, two middle, two high school, a continuation high school, and a community adult school as well as a Home Schooling Program.” 

Gilroy Unified serves the residents of the City of Gilroy and consists of eight elementary, three middle, currently one high school with a second scheduled to open next fall, one community day alternative and one continuation high school.

To find which school boundaries a particular address feeds into in Morgan Hill and San Martin, click on:

http://www.locatemyschool.com/WebLocator/WebLocatorForm1.aspx

From that website, choose “Morgan Hill” from the drop down window under “School District” on the left-hand side.  Then enter in the address and then click “search.”

For addresses located within Gilroy Unified School District, use the following website to input the address you are interested in:

http://schoolvisionsoftware.com/schoolfinder/GilroyUSD/

These website are a great tool for me and for my buyer clients to get the straight scoop on which schools belong to which addresses.  If you have any questions about this please contact me.

Whew!  The market was busy in south county last week!  The number of residential sales jumped in the south Santa Clara County towns of Morgan Hill, San Martin and Gilroy.  There were 44 residences that went from active to pending status as compared to 38 last week.  Of all the sales last week, 39 were single family homes and 5 were townhouses/condominiums.  69% of the sales were priced below $500,000.

Of these sales, the list price ranges were:

Below $200,000 = 2 sales (5% of total)

$200,000 - $500,000 = 28 sales (64% of total)

$500,000 - $800,000 = 9 sales (20% of total)

$800,000 - $1,200,000 = 4 sales (9% of total)

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

As of February 8, 2009, there are 569 residential (single family homes and condos) listings active on the market in Morgan Hill, San Martin and Gilroy.  There are currently 261 pending residential listings.  Therefore, 31% of the total listings are pending under contract as of this date.  Many of the pendings are short sales and therefore take a long time to close.  This could keep our pending percentage up artificially high. 

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

As we saw in my previous investment property case study , south Santa Clara County real estate can now be purchased for investment purposes and have a positive cash flow from the income received from rent.  Not only will there be a positive cash flow, but there is great potential for gains in equity appreciation.

Last month I looked at an example case study on a property in Gilroy and this month I will look at Morgan Hill.  The property chosen for this case study is 17230 Torrey Way located near the Morgan Hill City Hall.  There is a pool and spa in the backyard of this 4 bedroom, 2 bathroom, 1340 sq.ft. home sitting on a 7370 sq.ft. lot.  The current list price of this home is $359,900 and it is a bank-owned property.  This property has been on the market for 37 days.  Most likely the list price is a little high for this 52 year old home in an old part of Morgan Hill.  Therefore I will make the assumption that the bank will accept $325,000 for the purchase of this home.

Here are the assumptions that I made:

• Monthly rent amount = $2000 
• Purchase price = $325,000, 25% down payment = $81,250
• Loan:  5.5% interest rate with 1 5/8 discount points, 30 year loan, monthly payment = $1384, total acquisition cost = $6000 (including closing costs and points)
• Utilities paid by tenant
• Self-managed (no property management costs)
• 5% vacancy allowance
• Annual property taxes = $4062
• Annual insurance = $1000
• Annual maintenance costs = $3250
• Investor’s federal tax bracket = 25%, California state tax = 9.3%
• Holding period = 7 years
• Annual appreciation:  we’ll look at 3% and 4%
• Projected sales costs = 7%

Using the above assumptions, the property can be analyzed as an investment, taking into account tax depreciation, cash flow before and after taxes.  We will also look at the eventual sale of the property, looking at the total gain on the sale.

•  Income - Vacancy Allowance = Gross Operating Income = $22,800
• GOI - Operating Expenses = Net Operating Income = $17,738
• Subtract Mortgage Payments = $16,608
• ANNUAL CASH FLOW BEFORE TAXES = $1130
• ANNUAL CASH FLOW AFTER TAXES = $3,090 (takes cost recovery (depreciation) into account)

Looking at my assumption of selling the property in seven years with a conservative guess of 3% appreciation in value per year:

• Projected sale price in 2016 = $399,709
• Subtract cost of sale = $27,980
• Add 7 years of cash flow = $21,630
• Subtract remaining loan balance = $243,750
• CASH OUT ON SALE = $149,609
• Subtract initial investment of $87,250
• TOTAL GAIN ON SALE = $62,359

Looking at the same 7 year holding period but with a 4% average annual appreciation:

• Projected sale price in 2016 = $427,678
• Subtract cost of sale = $29,937
• Add 7 years of cash flow = $21,630
• Subtract remaining loan balance = $243,750
• CASH OUT ON SALE = $175,621
• Subtract initial investment of $67,500
• TOTAL GAIN ON SALE = $108,121

The increase in annual appreciation from 3% to 4% increased the gain by $45,762. 

Please consult your tax advisor for more information regarding the tax implications of buying, leasing and selling investment real estate.

The number of residential sales fell slightly this week in the south Santa Clara County towns of Morgan Hill, San Martin and Gilroy.  Last week there were 38 residences that went from active to pending status as compared to 42 last week.  Of all the sales last week, 37 were single family homes and 1 was a townhouses/condominium.

Of these sales, the list price ranges were:

Below $200,000 = 3 sales (8% of total)

$200,000 - $500,000 = 22 sales (58% of total)

$500,000 - $800,000 = 9 sales (24% of total)

$800,000 - $1,200,000 = 2 sales (5% of total)

$1,200,000 - $2,000,000 = 2 sales (5% of total)

As of February 1, 2009, there are 565 residential (single family homes and condos) listings active on the market in Morgan Hill, San Martin and Gilroy.  There are currently 248 pending residential listings.  Therefore, 30% of the total listings are pending under contract as of this date.  Many of the pendings are short sales and therefore take a long time to close.  This could keep our pending percentage up artificially high. 

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

My daughter was home this weekend, visiting from UCSB where she’s a freshman.  I asked her what she’d like to do yesterday and she said that she’d like to go on a family hike.  After the shock wore off that she didn’t say, “Go shopping,” we packed up some snacks and headed to Henry Coe State Park.

We have a treasure here in south Santa Clara County.  Not only is Henry Coe State Park the largest state park in northern California, it is the second largest state park in all of California.   Its 87,000 acres are covered with rugged terrain, beautiful vistas, meandering creeks, gorgeous flora and interesting fauna.

We drove to one of the Gilroy entrances called Hunting Hollow and began our ascent of Willson Peak.  We climbed 2000 vertical feet in about 2.5 miles.  Hard work, but the view at the top was worth it.  From our 2,651 foot vantage point, we could see the snow covered peaks of the high Sierras all the way across the San Joaquin Valley.  We only saw a few other hikers during our trek, and, considering what a beautiful day yesterday was, that is surprising.

Henry Coe State Park is an under-utilized gem here in the Bay Area and I feel fortunate to be able to claim it as one of the many fabulous assets that are offered to south county residents and visitors.

Gretchen Merrick, CRS, GRI Phone:408-892-9015 DRE#:01317499 Intero Real Estate Services gmerrick@interorealestate.com Featured Listings 16868 De Witt Ave Morgan Hill, CA 6 BR | 4.50 BA $849,999 More Details 1845 Silverwings Ct Morgan Hill, CA 4 BR | 3 BA $1,025,000 More Details

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