Real estate sales held steady with an impressive number this past week in the south Santa Clara County towns of Morgan Hill, San Martin and Gilroy.  There were 53 residences that went from active to pending status as compared to last week’s 56.  Of all the sales this past week, 47 were single family homes and 6 were townhouses/condominiums.  The highest price listing sold last week was a beautiful listing at 18456 Castle Ridge Drive in Morgan Hill, priced at $1,295,000.  The lowest priced listing sold last week was a short sale condo at 7723 Murray in Gilroy priced at $89,000.  Seventy-three percent of the sales this week were priced under $500,000.

Of these sales, the list price ranges were:

Below $200,000 = 6 sales (11% of total)

$200,000 - $500,000 = 33 sales (62% of total)

$500,000 - $800,000 = 11 sales (21% of total)

$800,000 - $1,200,000 = 2 sales (4% of total)

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

As of March 29, 2009, there are 509 residential (single family homes and condos) listings active on the market in Morgan Hill, San Martin and Gilroy.  There are currently 323 pending residential listings.  Therefore, 39% of the total listings are pending under contract as of this date - quite a high number.  Many of the pendings are short sales and therefore take a long time to close.  This keeps our pending percentage up artificially high. 

The truly good news is that 27 residential real estate listings closed escrow during the past week in the south county towns of Morgan Hill, San Martin and Gilroy.  Twenty-seven properties would comprise 3% of the total active and pending listings and 8% of the pending listings.  This is the largest number of closings in a single week that we have seen in a long time.

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

El Toro is the famous Morgan Hill landmark seen from most areas in town.  Every spring the Morgan Hill Historical Society sponsors a hike up the 1403 ft. peak.  The hike is correctly described as moderate to difficult due to the very steep portion up towards the top.  Thank goodness for Boy Scout Troop 799 (of which my son used to be a member) who set up ropes the day before the climb every year to aid in climbing the steep portion.

This annual climb is the only time that the mountain can be climbed officially as it is private land.  The group of hikers meets at the library and a local geologist, Peter Anderson, gives an interesting talk on how El Toro was formed.  The approximately 200 hikers were rewarded this year with a warm, sunny morning and spectacular views.

Hope to see you on the hike next year!

Excellent, simplified explanation of our current credit crisis by Jonathan Jarvis illustrating how the demand for mortgages was driven by investor greed:


The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

Want a more indepth discussion of the source of the crisis?  Listen to this interview of Frank Partnoy, a law professor and former Wall Street trader, by Terry Gross of Fresh Air on National Public Radio.  Fresh Air with Terry Gross is the best radio program on the air waves, in my opinion.

http://www.npr.org/templates/story/story.php?storyId=102325715

Wow!  Real estate sales surged this past week in the south Santa Clara County towns of Morgan Hill, San Martin and Gilroy!  There were 56 residences that went from active to pending status as compared to last week’s 37.  That is an increase of 34%!  Of all the sales this past week, 54 were single family homes and 2 were townhouses/condominiums.  The highest price listing sold last week was a short sale listing at 18660 Castle Lake Drive in Morgan Hill, priced at $999,999 (originally priced at $1,389,999).  The lowest priced listing sold last week was 1555 Hecker Pass Road #E201 in Gilroy priced at $174,900.  Sixty-nine percent of the sales this week were priced under $500,000.

Of these sales, the list price ranges were:

Below $200,000 = 2 sales (3% of total)

$200,000 - $500,000 = 37 sales (66% of total)

$500,000 - $800,000 = 11 sales (20% of total)

$800,000 - $1,200,000 = 6 sale (11% of total)

As of March 22, 2009, there are 522 residential (single family homes and condos) listings active on the market in Morgan Hill, San Martin and Gilroy.  There are currently 311 pending residential listings.  Therefore, 37% 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. 

However, only 12 residential real estate listings closed escrow during the past week in the south county towns of Morgan Hill, San Martin and Gilroy.  Twelve properties would comprise 1% of the total active and pending listings and 4% of the pending listings.  Hopefully we’ll see a marked increase in these percentages in 30 to 45 days when all of these new pending could potentially close escrow.

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

First-time buyers are being wooed from many different directions these days.  As I discussed in a previous post, the IRS is offering a first-time buyer tax credit to real estate buyers who meet certain stipulations.  In addition to this federal tax credit, Santa Clara County is offering a Mortgage Credit Certificate Program to first-time buyers.  And, as I explain in the federal tax credit post, a first-time buyer is defined as real estate buyers who have not owned a principal residence during the past three years.

A few highlights of the Santa Clara County program:

• It is a dollar for dollar tax credit against the borrower’s federal income tax - currently 15% of the interest paid
• The remaining 85% remains as a standard tax deduction
• The home must be purchased in one of the participating cities in the county - all south county cities are participating
• The home purchased must be owner-occupied
• The buyer’s income cannot exceed $97,800 for 1-2 persons and $112,470 for 3 or more persons
• The MCC Program doesn’t allow co-signers
• Maximum purchase price is limited to $570,000 for resale homes and $630,000 for new construction
• There is a possible recapture tax if the property is sold within the next nine years after purchase
• The County maintains a public list of participating brokers and funding lenders
• Applications for MCC are processed on a first come, first serve basis and there is an application fee of $275

For those interested in taking advantage of the MCC Program, you will want to make sure you are working with a paricipating funding lender.  For recommendations on lenders, call me at 408-892-9015 or email me at GMerrick(at)InteroRealEstate.com.

Real estate sales held steady  this past week in the south Santa Clara County towns of Morgan Hill, San Martin and Gilroy.  There were 37 residences that went from active to pending status and last week there were 39.  Of all the sales this past week, 35 were single family homes and 2 were townhouses/condominiums.  The highest price listing sold last week was a home located at 17027 Heatherwood Way in Morgan Hill, priced at $1,199,950.  The lowest priced listing sold last week was 7468 Church Street, a single family bank-owned home in Gilroy priced at $144,900.  Seventy-five percent of the sales were priced under $500,000.

Of these sales, the list price ranges were:

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

$200,000 - $500,000 = 26 sales (70% of total)

$500,000 - $800,000 = 8 sales (22% of total)

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

As of March 15, 2009, there are 535 residential (single family homes and condos) listings active on the market in Morgan Hill, San Martin and Gilroy.  There are currently 288 pending residential listings.  Therefore, 35% 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. 

Sixteen residential real estate listings closed escrow during the past week in the south county towns of Morgan Hill, San Martin and Gilroy.  Seventeen properties would comprise 2% of the total active and pending listings and 6% of the pending listings.

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

Most likely you’ve heard about the First-Time Buyer Credit offered through the 2009 Economic Stimulus Package passed by Congress.  But what you may not realize is that even if you owned a home previously, if you haven’t owned your primary residence within the past three years, you are considered a first-time buyer and may apply for the tax credit of $8000.

This tax credit is for $8000 or 10% of the purchase price, which ever is smaller.  In Santa Clara County, chances are that you are not purchasing a residence for less than $80,000 and so will receive the full $8000 credit on your taxes.  The home must be purchased between January 1, 2009 and December 1, 2009, so time is of the essence.  This credit is unlike the 2008 first-time buyer credit in that it does not have to be repaid to the IRS.

Single taxpayers with modified adjusted gross incomes (MAGI) up to $75,000 will receive the full credit.  The credit is reduced proportionally with a MAGI up to $95,000.  Any single taxpayer earning over that will not receive the credit.  Married couples with MAGI up to $150,000 will receive the full credit.  In this case the credit is reduced proportionally with a MAGI up to $170,000.  Married couples earning over $170,000 will not receive the tax credit.

For more information, the National Association of Home Builders provides an informative site:  http://www.federalhousingtaxcredit.com/2009/glance.php

Please consult your tax advisor for more information regarding the tax implications of buying real estate.

Real estate sales fell slightly during the first week of March in the south Santa Clara County towns of Morgan Hill, San Martin and Gilroy as compared to last week’s robust sales.  There were 39 residences that went from active to pending status and last week there were 45.  Of all the sales this past week, 35 were single family homes and 4 were townhouses/condominiums.  The highest price listing sold last week was a Cordevalle estate located at 1445 Lakeview Court in San Martin, priced at $2,595,000.  The lowest priced listing sold last week was 8155 Westwood Drive, #19, a condominium in Gilroy priced at $189,000.

Of these sales, the list price ranges were:

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

$200,000 - $500,000 = 24 sales (61% of total)

$500,000 - $800,000 = 7 sales (18% of total)

$800,000 - $1,200,000 = 3 sales (8% of total)

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

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

As of March 8, 2009, there are 536 residential (single family homes and condos) listings active on the market in Morgan Hill, San Martin and Gilroy.  There are currently 291 pending residential listings.  Therefore, 35% 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. 

Seventeen residential real estate listings closed escrow during the past week in the south county towns of Morgan Hill, San Martin and Gilroy.  Seventeen properties would comprise 3% of the total active and pending listings and 6% of the pending listings.

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 2, 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.  The home that will be analyzed here is an REO, i.e. bank-owned real estate.

The property chosen for this case study is 125 Bennett Street in Gilroy, a 12 year old home with easy access to Monterey Road. This is a 3 bedroom, 2.5 bathroom home on a 3600 sq.ft. lot.  The current list price of this home is $289,900.  This property has been on the market for 401 days and the beginning list price was $549,000.  I will make the assumption that the bank will accept $280,000 for the purchase of this home.

           

Here are the assumptions that I made:

• Monthly rent amount = $1900
• Purchase price = $280,000, 25% down payment = $70,000
• Loan:  5.5% interest rate with 1 3/4 discount points, 30 year loan, monthly payment = $1192, total acquisition cost = $5000 (including closing costs and points)
• Utilities paid by tenant
• Self-managed (no property management costs)
• 5% vacancy allowance
• Annual property taxes = $3500
• Annual insurance = $900
• Annual maintenance costs = $2800
• Investor’s federal tax bracket = 25%, California state tax = 9.3%
• Holding period = 7 years
• Annual appreciation:  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 = $21,660
• GOI - Operating Expenses = Net Operating Income = $14,460
• Subtract Mortgage Payments = $14,304
• ANNUAL CASH FLOW BEFORE TAXES = $156
• ANNUAL CASH FLOW AFTER TAXES = $1,990 (takes cost recovery (depreciation) into account)

Looking at my assumption of selling the property in seven years with a guess of 4% appreciation in value per year:

• Projected sale price in 2016 = $368,461
• Subtract cost of sale = $25,792
• Add 7 years of cash flow = $1,092
• Subtract remaining loan balance = $186,513
• CASH OUT ON SALE = $157,248
• Subtract initial investment of $75,000
• TOTAL GAIN ON SALE = $82,248

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

The last week of February was a busy one for real estate sales in the south Santa Clara County towns of Morgan Hill, San Martin and Gilroy.  There were 45 residences that went from active to pending status as compared to 30 last week - a 33% jump!  Of all the sales last week, 39 were single family homes and 6 were townhouses/condominiums.  The highest price listing sold last week was 8325 Pepper Grass Court in Gilroy, priced at $1,999,950.  The lowest priced listing sold last week was 7670 Eigleberry Street, a single family home in Gilroy priced at $159,900.

Of these sales, the list price ranges were:

Below $200,000 = 3 sales (7% of total)

$200,000 - $500,000 = 31 sales (69% of total)

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

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

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

As of March 1, 2009, there are 535 residential (single family homes and condos) listings active on the market in Morgan Hill, San Martin and Gilroy.  There are currently 291 pending residential listings.  Therefore, 35% 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. 

Due to the high percentage of pending listings week after week, starting this week I will also be reporting the number of residential real estate listings that close escrow during the past week in the south county towns of Morgan Hill, San Martin and Gilroy.  For this past week, 28 homes closed escrow.  Twenty-eight properties would comprise 3.4% of the total active and pending listings and 9.6% of the pending listings.

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

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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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