California Real Estate – Investment Opportunities

The Office of Federal Housing Enterprise Oversight (OFEHO) has released its second quarter data and analysis of the U.S. housing market and California appears to still be the land of opportunity for real estate investing.

Since 1980 house price in the Pacific region has increased more than 431%. California real estate is one of the driving forces behind this real estate appreciation trend.

While the Pacific region is showing a -10% trend for the 12 month period and about a -5% trend for the second quarter, the 5–year trend is still around plus 50%.

California communities represent 12 of the bottom 20 depreciating metro real estate markets nationally. The central valley communities of Merced, Stockton and Modesto lead the list.

For investors looking for real estate deals, California is a land of opportunity. With Germany’s and the United Kingdom’s economies in decline, the U.S. dollar is gaining in value and appeal as a safe haven for investors.

U.S. and California real estate continue to represent good investment opportunities. 

Contact Paul Mees for California real estate (925) 963–4246

Bay Area Home Prices Dip – Bay Area Home Sales Rise

Bay Area home sales finally increased for year-over-year gain since early 2005 this July as buyers responded to price cuts and snapped up foreclosures. The median sales price dove to a 53-month low, according to DataQuick.

Total Bay Area home sales were up 5.7 percent over June 2008 and up 2.2 percent over July 2007. Sales of foreclosures and bank owned properties accounted for approximately 33% of homes sold.

Investors and home buyers looking for a good deal are generating multiple-bid scenarios for bank owned properties. Those waiting for clear evidence of the Bay Area housing market hitting bottom may still be sitting on the sidelines when all the best properties are gone.

The median price of a Bay Area home in July dropped -29.3% from July 2007. The median has not been lower than July's since March 2005.

Copper Thieves are Hitting Vacant Homes

The number of reports of empty homes being vandalized for copper wiring and pipe is increasing throughout the Bay Area. Realtors listing vacant homes should be aware that this activity is on the rise.

Investors and home buyers negotiating contracts on bank owned properties need to be aware that the bank is selling these homes “as is” which means that if someone comes along and strips the copper wire and pipe out a bank owned price you are buying – it is your loss, not the banks.

Check with your Realtor to see what preventive steps you can take to make sure thieves don’t rob you of a good deal.

One of the huge advantages of a team is the incredible blend of skills, knowledge and experience each member brings to the team and our clients. One area of expertise that more and more clients need from their real estate agent concerns real estate as an investment.

We are fortunate that Craig has experience as a financial advisor and has a personal love of the stock market to fuel his continued interest. We recently received an inquiry about whether the time is right and ripe for investing in real estate versus the stock market. Here is Craig’s response:

Thanks for your inquiry and we would be happy to help you evaluate the market to determine if now or later is a good time for you to get into the real estate market as an investor.  As an investor myself in both securities and real estate, I appreciate the process of evaluating what type of investments make the most sense at any particular point of time.  Then, the challenge is to do enough homework to determine what specific investments to add to one’s portfolio and last but not least come up with the criteria to determine the right time to actually pull the trigger to buy and then subsequently to sell.  In my own investments I have applied both a technical analysis and a fundamental analysis to this process.  I won’t bore you with all the details, but suffice it to say that there are a lot of variables in this process and no crystal ball.  So, sometimes it’s a matter of either developing a system you set up to make the buy & sell decision, or taking all the data into consideration and going with a gut feel.  In my case I have used both. 

At the current time in the real estate market there are a number of variables that indicate that this is a good time to buy properties.  First, we had several years of phenomenal growth in real estate followed by the last couple of years of heavy declines.  The question is whether this decline (pullback) is sufficient, or is there more to come.  But here’s the kicker from my view point, if you look at the heavy decline in home prices, it appears that the rate of decline is slowing or even bottoming in certain locations.  Plus, interest rates are still at a relatively all time low.  So, even if the market does continue to gradually decline a bit more, the chances for a significant drop from here is getting lower.  Conversely, the chances for interest rate hikes are increasing as the market begins to turn around.  So even if prices continue to decline a bit, if interest rates increase it basically cancels out the net profit you would realize from waiting.  I believe that now is a good time to buy based on these factors.

There are still a lot of foreclosure properties (REO’s, short sales, pre-foreclosures) on the market applying pressure, but as this inventory is reduced prices will get back to a fair market value based on supply and demand.  In our area (Danville, Alamo and the 680 corridor from Pleasanton to Walnut Creek) it continues to be a highly attractive area to live in, with a localized economy that remains strong.  However, even in some of the outlying areas such as Brentwood which has seen a 33% drop in median home prices compared to our 10-14% drop, we are seeing more buying activity and even multiple offers on properties that are priced right.

There are currently 3,692 properties on the East Bay MLS system that reference REO’s, Short Sales and pre-foreclosures.  When I look in the 680 corridor from Martinez to the north and Pleasanton/Livermore to the south, there are currently 401 listings referencing REO’s, Short Sales and pre-foreclosures.

If are interested in investment properties, REOs, or foreclosures, contact Craig – (925) 984–4910

Because of the drop in the dollar overseas and falling home prices in US, foreign investment in American homes is rapidly growing. The US market is now becoming attractive for foreign investors to buy homes here as places to live and even as investments. Cities like New York, San Francisco, Chicago, and Phoenix are all seeing increased sales activity from foreigners. Consumers from countries like China and India see great value in American real estate; while price speculation might be the driving factor, living in the United States and enjoying the American culture and educational opportunities are becoming increasingly important.

In the last decade San Francisco has been a steady top 3 pick for foreign investors for their real estate investment dollars. The San Francisco area's high-tech location cluster, combined with the quality of life, is a major factor driving its investment appeal.

The entire Northern California Market has been booming in the past ten years, driven in large part by the high technology and Internet boom that is centered in the Silicon Valley and other parts of the Bay Area.

San Francisco is the leading center for multimedia technology companies in the United States; the steadily improving economic conditions in Japan and Southeast Asia will further fuel the California economy, with the San Francisco Bay Area continuing to serve as the gateway to Pacific trade.

Many Californians are looking out of state for real estate investment properties. The high cost of California real estate has many investors, especially new investors, looking for housing markets to invest in where the cost of entry is low and projected growth is high.

This is the exact strategy at the core of Northpoint Group’s business model. Northpoint has identified over half a dozen markets in the U.S. where the average investment property is between $180K to $280K. Investors will need an average of 20% down, but Northpoint forecasts appreciation in the 7% to 12% range.

The Harper Team would like to welcome Rob Borghese from Northpoint aboard as one of our Out-of-State Investment Coordinators. We have been wanting to add out-of-state real estate investing as part of the service and value we bring to our clients.