How Multiple Offers Affect Sale Price

sebfreyBlog, Charts and Statistics, Commentary, North Monterey County Real Estate, Santa Cruz Real Estate, Sellers, Silicon Valley Real Estate

It’s that time of year again! Early in the year, inventory is low – but there’s no shortage of eager buyers looking to purchase a home. While an imbalance of supply versus demand is not uncommon in the greater San Francisco Bay Area, it’s especially acute early in 2020. New inventory is trickling onto the market, and it will continue to ramp up as we get into spring. But at the moment, there’s nowhere near enough new inventory to meet demand. Sellers with well-priced homes across the region are being rewarded with multiple offers from prospective purchasers. That is of course a wonderful situation for a seller – but it’s more like a nightmare for buyers. Many of these buyers will have been looking for months, even years, before they finally put an offer in on a property…only to find out that the seller has a number of competing offers to choose from. A buyer never knows how a seller will respond in a multiple offer situation. Will they accept just one offer from the “best” buyer? Will they make counter offers to specific buyers? Will they ask all buyers to respond with their “highest and best” offer, knowing that there are multiple offers on the table? What’s more, a seller can make different counter offers to different buyers, with different prices and terms. I’m helping clients manage a few multiple-offer situations at the moment, as listing agent and as buyer’s agent. Working with buyers in a multiple offer situation is especially fraught, because of course, … Read More

California Real Estate Forecast for 2020

sebfreyBlog, Local, Santa Cruz Real Estate, Silicon Valley Real Estate, Video

As you may have heard, I recently became a Broker Associate with Compass in Los Gatos (the former Alain Pinel REALTORS). There are a lot of benefits to working with a large, upscale brokerage – one of them being that you can get access to valuable information before the competition. Yesterday, our office had the first meeting of the year and it featured a feature presentation by Jordan Levine, the Deputy Chief Economist for the California Association of REALTORS. I have also seen many presentations by Jordan’s boss, Leslie Appleton-Young, and I even had her as a guest on an episode of the Bay to Bay Podcast. Jordan, by the way, is also a podcaster as he is the co-host of California Association of REALTORS Housing Matters podcast. Video of California Real Estate Forecast for 2020 The presentation was about 40 minutes long, as there was a lot to digest in there. The bottom line is that the 2020 real estate market is expected to look a lot like the 2019 real estate market: tight inventory, low interest rates, poor affordability, but with slightly more sales at somewhat higher prices (statewide, but the greater Bay Area should be an exception). Key Points for California’s 2020 Real Estate Forecast Housing prices may be up, but actual mortgage payments are down Lowest Unemployment in 50 Years Prices at the very high end softening, lower priced homes rising in price. Higher-end homes taking longer to sell U.S. 2020 GDP Projected @ 1.6% (down from 2.2% in 2019) U.S. Inflation … Read More

Talking AB1482 on the Radio

sebfreyAudio, North Monterey County Real Estate, Santa Cruz Real Estate, Silicon Valley Real Estate

On October 18, 2019 I appeared on KSCO Radio in Santa Cruz as a guest on the Mike Young Radio Hour. Mike is a REALTOR I have known virtually my entire career in real estate. He has a weekly radio show and he usually has another Santa Cruz REALTOR, Dennis Casey, as his wingman. For the October 18 2019 airing, I was invited on as a guest to discuss the recently-enacted California AB1482 legislation, which establishes rent control state wide in California. We touched on a few other topics of interest to followers of Santa Cruz and California real estate as well – so if you want to learn more about AB1482 and rent control, please listen to the audio of the radio show below.

2019 Mid-Year Real Estate Update for Santa Clara, Santa Cruz, and Monterey

sebfreyCharts and Statistics, Commentary, Local, North Monterey County Real Estate, Santa Cruz Real Estate, Silicon Valley Real Estate

And here we are, just past half-way through 2019! Happened so quick, I’ll bet you feel a bit of whiplash. It’s been an interesting half-year so far, especially when it comes to the Monterey and San Francisco Bay Area real estate market. For this 2019 Mid-Year Real Estate update, I took a dive through the MLS (Multiple Listing Service) to dig deep through the numbers for Santa Cruz, Santa Clara, and Monterey counties for the first six months of the year. So how is our real estate market doing, at the mid-point of 2019? One that comes through loud and clear is that just like politics, all real estate is local. The story told through these numbers is much different in all three counties.  If you want, you can skip down to the county that interests you most:  Santa Clara, Santa Cruz, or Monterey. Seb Frey Talks Real Estate Mid-2019 on Seb Frey TV Santa Clara County Santa Clara County is the heart of Silicon Valley – what happens there affects the real estate market for a large portion of northern California, and all of the San Francisco and Monterey Bay Areas.  The numbers for the first half of 2019 are markedly different than the first half of 2018.  In particular: Homes are taking almost twice as long to sell this year (93% longer) Price Per Square Foot has dropped 6.76% Average Sale Price has dropped 6.63% Median Home Price has dropped 8.95% Sale to List Price Ratio down 8% Home Sales are down 9.5% this … Read More

Selling a Home in 2019 vs. 2020

sebfreyCommentary, Local, North Monterey County Real Estate, Santa Cruz Real Estate, Silicon Valley Real Estate

One of the most popular pages on my website in 2018 was an article where I addressed the perennial question, “Is it better to sell my home this year, or next?”  In that posting, I opined that the preponderance of evidence is that 2018 was shaping up to be a pretty good year for home sellers.  Today many sellers are wondering about selling a home in 2019 vs. 2020. In last year’s article, I said that given a choice, it would be better for homeowners to sell in 2018 rather than rolling the dice on 2019, as the economic forecast for 2019 was cloudy. Now that we’ve flipped the page into 2019, I can say it looks like the jury is in on this one:  2018 was the peak year for this real estate market cycle.  The question before us today is, I think:  will 2019 prove to be a good-but-not-great year for sellers – or will it be the year the market falls off a cliff, again? Why The Real Estate Market Has Gone Soft After much thought and analysis, it seems to me that the softening of appreciation in home prices is due to the market finally reaching the limit of affordability.  In Santa Cruz county, only 12% of households can “afford” a median-priced home (with a 20% down payment).  In Santa Clara county that number is 16%.  In Monterey county, it’s 19%. It looks like what we’re seeing today simply comes down to the fact that buyers simply can’t afford to pay more … Read More

Santa Cruz City Council Defies Voters

sebfreySanta Cruz Real Estate

Information in this report was provided courtesy of the Santa Cruz County Association of REALTORS. On Tuesday, January 8th 2019 – a night which will live in infamy – the Santa Cruz City Council defied voters who recently rejected control and Just Cause Evictions when they soundly rejected Measure M by 61% to 39%.   They did this by passing a first reading of an “emergency” just cause evictions ordinance.  Councilman Brown made the motion, Krohn seconded, and Cummings and Glover voted yes. Watkins, Meyers, and Mathews voted No. The term of the draft Just Cause Eviction Ordinance was extended to one year. A few changes to the draft ordinance were made from the dais:  If the owner lives on the same property, it is exempt from JCE. Good temporary news for those with ADUs or duplexes. Partner was legally defined as registered domestic partner. However renters can still move in other family members without owner permission, beyond the number on a lease, and up to the federal occupancy limit. The relocation ordinance passed a second reading with hardly any discussion at 11:50PM.  Rent increases are limited to 5% in one year and 7% over two years. Higher increases, that cause renters to move, trigger relocation fees of two months actual rent.  This passed unanimously.  The Council states that this is not technically rent control and that it can therefore be applied to all rental property including single-family homes and condos (and so not be in violation of Costa Hawkins, the repeat of which was rejected statewide … Read More

Why It’s Better to Sell Your Home Early in 2019

sebfreyCommentary, North Monterey County Real Estate, Santa Cruz Real Estate, Silicon Valley Real Estate

The Real Estate Closing Timeline

If you’re thinking of selling your home in 2019, it’s something you’ll want to do sooner rather than later.  Our market is almost a year-round market; things slow down for the holidays but they pick right up again half way through January. The market, though, has softened considerably. My advice to sellers is to have their homes ready for the market by mid-February to get a jump on the spring market.  By listing early in the year, you’ll beat the competition to market and you’ll probably have a much easier time selling. Best Advice for Bay Area Sellers in 2019 Sellers should very, very carefully consider their list price before listing their home for sale on the MLS.  Don’t be greedy – be realistic.  Your home has probably appreciated substantially over the past several years – take the money and run.  Price it where you know it will get offers within 2-3 weeks; any higher than that and you’ll probably end up shooting yourself in the foot.  In a softening market, you don’t do yourself any favors by testing the market with a high price. Prepping your Home for the Market Remember, it’s always the basics that give you the biggest bang for the buck, and what’s great is that they cost relatively few bucks. Empty the house at (“de-clutter, de-personalize”) so it looks as spacious, light, and airy as possible. Paint everything, whether it needs it or not.  Painting makes your home look fresh and clean, and gives it that “new home smell.” Clean everything, … Read More

The Endowment Effect in Real Estate

sebfreySanta Cruz Real Estate

The endowment effect is a human tendency to value something more when we own it. Last year, economist Richard Thaler even won the Nobel Prize for his work regarding this behavior. But how does the endowment effect in real estate manifest itself? First, let’s give a simple example of how the endowment effect works.  Let’s say a group of people is asked how much a coffee mug is worth. They may respond with something like “around $2.” However, if they’re asked how much each member’s own coffee mug is worth, they will almost invariably respond with a higher value, like perhaps $8.  It’s a striking phenomenon, and it’s observable in primates as well as humans.  Simply put, there’s a strong tendency for us to overvalue things we already own. It could be something simple like a coffee mug, but it also applies to our real estate. Homeowners often think their homes are worth more than they actually are.  For a long time, I’d figured this was primarily because of a strong emotional attachment to the property.  After all, it’s only natural: most homeowners have created lots of memories over many years in these homes, and so of course they value the property more highly than “the next guy.”  Sociologists, however, explain that this works on a much deeper level than simple emotional attachment: fear, or specifically, fear of loss (and no, fear is not an emotion). That fear of loss drives us to overvalue things we own, and according to the Endowment Effect, this is the … Read More

The World’s Greatest Realtor 2018 Award Winner

sebfreyCommentary, Local, North Monterey County Real Estate, Santa Cruz Real Estate, Silicon Valley Real Estate

Realtor Logo

Sebastian “Seb” Frey is the The World’s Greatest Realtor 2018 Award Winner!  This prestigious award was granted to him by one of his clients upon the successful sale of their family home in San Jose, California.  Closing gifts are common in the Santa Clara county real estate market, but it is unusual for a client to buy the agent a gift – usually, it’s the other way around.  So why did this homeowner go through the trouble and expense of getting a custom made closing gift for their Realtor? The World’s Greatest Realtor Case Study Cathy grew up in a quiet, tidy neighborhood of San Jose.  Homes in the neighborhood consisted of single level ranch homes built in the 1950’s – most were around 1150 square feet or so, and the typical lot size was about 6,000 square feet.  Her parents were the second owner of the home.  Mom had died over a decade ago, and dad had just recently died. The home was being lived in by her brother Steve, who was on title.  A third sibling, another sister, was on title as well.  Steve had been living in the home for most of his life – and had a lifetime’s worth of items stored in the house. Actually, he had several lifetimes worth of stuff stored there. To be honest, the home was packed.  Many rooms had boxes and bags of items, stacked from floor to ceiling.  There were storage sheds in the back yard – crammed full of junk.  The garage was likewise completely … Read More

Selling a Home and Buying Another Is Easy!

sebfreyDownsizing, Local, North Monterey County Real Estate, Santa Cruz Real Estate, Silicon Valley Real Estate

The Real Estate Cycle

Are you itching to swap homes?  Maybe you have a new child on the way and want to step up into a larger home than you have now.  Or it could be that all your kids have left the nest (waaaa!  Or yeah!?), and now you’re looking to downsize into a smaller home.  Because our housing costs are so high, if you’re like 88% or so of the home-owning public, you’ll probably need to sell your current home before you can close on the sale of a new one.  If you’re in that boat, I’ve got some good news for you:  selling a home and buying another is easy! One of the first questions home owners have is, should I put my home on the market before I find the house I want to move to, or should I find my new home, and then put my current house up for sale?  For most homeowners, the answer is clear:  put your current home up for sale before making an offer on a new one. Here’s exactly what you need to do to make a smooth move from your current digs to the new pad.  First, get your home on the market.  I know, getting it ready to list for sale on the market can be a lot of work, but it’s got to be done.   It needs to be fully staged and prepared in order to expedite the sale and thereby maximize its sale price. After the home is on the market, the next step is getting your … Read More