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Real Estate Real Estate M Maarrkkeett U Uppddaattee – – Q Q44 2 2001144
Overview Overview f oforr S Siliilcicoonn V Vaallleleyy 
The Silicon Valley Real Estate Market continues to be driven by h...
(Number of consumers viewing homes for sale.) 
Some seasonal stats but 
mostly interest rate driven.
Banks make money when they lend money. 
Look for increased availability of loans to continue into 2015.
Scores are just one component. 
Lenders evaluate total risk. As the 
economy improves, lenders relax 
requirements. 
Ellie...
FHA and Fannie Mae loans require 
as low as 3-5% down payment. 
For buyers with good monthly 
income, low debt, but do not...
30 Year Fixed Rate Mortgages 
Fed stopped buying bonds and we expected rates to 
go up. However, EBOLA, and the European m...
Mortgage Rate Projections 
Everyone continues to watch employment numbers, 
Europe, consumer confidence, and inflation. 
A...
30 Year Fixed Rate Mortgages 
Affordability for SV will be impacted more by projected rate increase 
than actual price inc...
Date Mortgage Interest Rate* P&I** 
Today $500,000 3.98% $2,381.31 
2015 4Q $520,000 5.1% $2,714.75 
Difference in Monthly...
Date Mortgage Interest Rate* P&I** 
Today $1,000,000 3.98% $4,762.63 
2015 4Q $1,040,000 5.1% $5,429.50 
Difference in Mon...
Buyer’s Purchasing Power 
5.25 $ 2,761 $ 2,692 $ 2,623 $ 2,554 $ 2,485 
5.00 $ 2,684 $ 2,617 $ 2,550 $ 2,483 $ 2,415 
4.75...
Buyer’s Purchasing Power 
5.25 $ 5,522 $ 5,384 $ 5,246 $ 5,108 $ 4,970 
5.00 $ 5,368 $ 5,234 $ 5,100 $ 4,966 $ 4,831 
4.75...
Decade Average Rate 
1970s 8.86% 
1980s 12.7% 
1990s 8.12% 
2000s 6.29% 
Freddie Mac 
Historic Mortgage Rates by Decade 
M...
Case Shiller 
Year-Over-Year PRICE 
CHANGES 
Prices will flatten over the remaining of 
2014 and into early 2015. Now is t...
S&P Case-Shiller Home Price Indices 
Not a bubble. 
Not speculative. 
Not yet meeting demand of a growing population. 
S&P...
% Change in Sales from last year 
For Silicon Valley about 10% 
by Price Range 
NAR 10/2014
Renting will not improve your financial wealth.
Year-over-Year 
Inventory Levels 
As homeowners regain equity, more and more homes will come onto the market 
in 2015. Mor...
As the 5th most populated county in California, Santa Clara County is projected to increase 
population at a rate of 1.2% ...
2015 
PREDICTIONS 
2015 
PREDICTIONS 
1. Housing prices will continue to increase but at a slower rate than 2014. Projecti...
InIn S Suummmmaarryy 
Silicon Valley continues to be a unique real estate market, unlike any other in 
the country. Our ma...
Resources 
http://www.freddiemac.com/finance/pdf/October_2014_public_outlook.pdf 
http://www.fanniemae.com/resources/file/...
Resources 
KEEPINGCURRENTMATTERS.COM 
Slide Slide Title Link 
35, 36 Existing Home Sales, Pending 
Home Sales, http://www....
Silicon Valley Real Estate Market Report November 2014
Silicon Valley Real Estate Market Report November 2014
Silicon Valley Real Estate Market Report November 2014
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Silicon Valley Real Estate Market Report November 2014

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A market update discussing affordability, average home prices, and mortgage availability for Santa Clara County and beyond. The Veridian Realty Group focuses on achieving success with both home sellers and home buyers in this dynamic real estate market. Keep up with local market news by subscribing to our newsletter at VeridianRealtyGroup.com or on the blog www.TalkToCJ.com

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Silicon Valley Real Estate Market Report November 2014

  1. 1. Real Estate Real Estate M Maarrkkeett U Uppddaattee – – Q Q44 2 2001144
  2. 2. Overview Overview f oforr S Siliilcicoonn V Vaallleleyy The Silicon Valley Real Estate Market continues to be driven by high demand due to continued job growth and population growth. As affordability decreases, prices are beginning to flatten out. Multiple offers are still being seen in communities with <30 minute commute to tech jobs and neighborhoods with high scoring schools. Lenders are beginning to loosen borrower requirements via the acceptance of lower credit scores. However, underwriting of loans continue to demand tons of documentation from borrowers about debt, credit history, and reserves. Low interest rates continues to drive consumers to keep looking and predictions of higher interest rates in 2015 will continue to drive consumer demand to buy now instead of later. Sellers with equity are recognizing 2015 as the year to sell and either upgrade their home/neighborhood or move out of the area.
  3. 3. (Number of consumers viewing homes for sale.) Some seasonal stats but mostly interest rate driven.
  4. 4. Banks make money when they lend money. Look for increased availability of loans to continue into 2015.
  5. 5. Scores are just one component. Lenders evaluate total risk. As the economy improves, lenders relax requirements. EllieMae
  6. 6. FHA and Fannie Mae loans require as low as 3-5% down payment. For buyers with good monthly income, low debt, but do not have 20% down, these loans are key to buying a home. EllieMae
  7. 7. 30 Year Fixed Rate Mortgages Fed stopped buying bonds and we expected rates to go up. However, EBOLA, and the European markets actually pushed rates down to 3.98% in early November. Freddie Mac Actual Rates January 2013 – October 2014 Freddie Mac 10/2014
  8. 8. Mortgage Rate Projections Everyone continues to watch employment numbers, Europe, consumer confidence, and inflation. Analyst Projected Rate 2015 4Q Fannie Mae 4.7% Freddie Mac 5.1% Mortgage Bankers Assoc 5.1% National Assoc of Realtors 5.4%
  9. 9. 30 Year Fixed Rate Mortgages Affordability for SV will be impacted more by projected rate increase than actual price increase for 2015. 1/2013 10/2014 Freddie Mac Projected Rates June 2014 – 2015 4Q Freddie Mac 10/2014 Freddie Mac Rates January 2013 – October 2014
  10. 10. Date Mortgage Interest Rate* P&I** Today $500,000 3.98% $2,381.31 2015 4Q $520,000 5.1% $2,714.75 Difference in Monthly Payment $333.44 *Average Commitment Rate per Freddie Mac **Principal and Interest Payment Monthly Annually Over 30 Years $333.44 $4,001.28 $120,038.40
  11. 11. Date Mortgage Interest Rate* P&I** Today $1,000,000 3.98% $4,762.63 2015 4Q $1,040,000 5.1% $5,429.50 Difference in Monthly Payment $666.87 *Average Commitment Rate per Freddie Mac **Principal and Interest Payment Monthly Annually Over 30 Years $666.87 $8,002.44 $240,073.20
  12. 12. Buyer’s Purchasing Power 5.25 $ 2,761 $ 2,692 $ 2,623 $ 2,554 $ 2,485 5.00 $ 2,684 $ 2,617 $ 2,550 $ 2,483 $ 2,415 4.75 $ 2,608 $ 2,543 $ 2,478 $ 2,412 $ 2,347 4.50 $ 2,533 $ 2,470 $ 2,407 $ 2,343 $ 2,280 4.25 $ 2,460 $ 2,398 $ 2,337 $ 2,275 $ 2,214 4.00 $ 2,387 $ 2,327 $ 2,268 $ 2,208 $ 2,148 3.75 $ 2,316 $ 2,258 $ 2,200 $ 2,142 $ 2,084 $ 500,000 $ 487,500 $ 475,000 $ 462,500 $ 450,000 -2.5% -5% -7.5% -10% RATE Principal and Interest Payments rounded to the nearest dollar amount.
  13. 13. Buyer’s Purchasing Power 5.25 $ 5,522 $ 5,384 $ 5,246 $ 5,108 $ 4,970 5.00 $ 5,368 $ 5,234 $ 5,100 $ 4,966 $ 4,831 4.75 $ 5,216 $ 5,086 $ 4,956 $ 4,825 $ 4,695 4.50 $ 5,067 $ 4,940 $ 4,814 $ 4,687 $ 4,560 4.25 $ 4,919 $ 4,796 $ 4,673 $ 4,550 $ 4,427 4.00 $ 4,774 $ 4,654 $ 4,535 $ 4,416 $ 4,297 3.75 $ 4,631 $ 4,515 $ 4,400 $ 4,284 $ 4,168 $1,000,000 $ 975,000 $ 950,000 $ 925,000 $ 900,000 -2.5% -5% -7.5% -10% RATE Principal and Interest Payments rounded to the nearest dollar amount. Multiple offers not nearly as scary as higher interest rates!
  14. 14. Decade Average Rate 1970s 8.86% 1980s 12.7% 1990s 8.12% 2000s 6.29% Freddie Mac Historic Mortgage Rates by Decade My first home in California 1992 – 8.25%!!
  15. 15. Case Shiller Year-Over-Year PRICE CHANGES Prices will flatten over the remaining of 2014 and into early 2015. Now is the time for buyers to seriously consider making an offer on a home. S&P Case Shiller 10/2014
  16. 16. S&P Case-Shiller Home Price Indices Not a bubble. Not speculative. Not yet meeting demand of a growing population. S&P Case Shiller 10/2014
  17. 17. % Change in Sales from last year For Silicon Valley about 10% by Price Range NAR 10/2014
  18. 18. Renting will not improve your financial wealth.
  19. 19. Year-over-Year Inventory Levels As homeowners regain equity, more and more homes will come onto the market in 2015. More inventory will help control prices but buyers must be aware of rising interest rates on loans. NAR 10/2014
  20. 20. As the 5th most populated county in California, Santa Clara County is projected to increase population at a rate of 1.2% or about 25,000 people each year over the next 20 years. For more demographic information visit this link.
  21. 21. 2015 PREDICTIONS 2015 PREDICTIONS 1. Housing prices will continue to increase but at a slower rate than 2014. Projection: 5%-8% for 2014 in Santa Clara County. 2. Rents will continue to increase 5-10% in Santa Clara County with higher rents driven by city, schools, and commute. 3. Morgan Hill, Gilroy, and North San Jose will heat up as new construction is greatest in these localities. Expect jumps in rents for North San Jose (commute) and price increases for Morgan Hill/Gilroy as they close the gap back to 2007 peak. 4. Expect Willow Glen and Campbell to flatten out as availability of homes and schools will keep average sales price gain =/<5% for 2015. Look for builders to continue to grab older/rehab homes with all cash. 5. Watch Saratoga/Cupertino/Mountain View/Los Altos, and Palo Alto to continue push average sale price up with a projected gain of 10% in 2015. 6. Expect commute time to increase for South Bay residents as mass transit is far behind job growth. 7. Expect 2% increase on updated assessed value for property taxes. 8. Ability to obtain a loan become easier due to improved economy and lower volume of applications. 9. Expect interest rates to increase to 4.75% by summer 2015. 10. Expect El Dorado County to become one of the fastest growing counties in California due to Prop 60/90 property tax transfer. (Silicon Valley retirees can buy a larger home and still be close to family and all the Bay Area/Tahoe offers.)
  22. 22. InIn S Suummmmaarryy Silicon Valley continues to be a unique real estate market, unlike any other in the country. Our market is driven by job generation, climate, and cultural diversity. 2015 is projected to see continued growth for jobs, rents, home prices, population, and an overall better economy. We all need a home and at Veridian Realty Group, we have the professionals to help you not only determine how to afford buying a home in Silicon Valley, but also the neighborhood knowledge and negotiation skills to work on your behalf in a high integrity manner. Call us today to set up time to discuss your goals. 888.858.2386 Or visit us on the web at VeridianRealtyGroup.com
  23. 23. Resources http://www.freddiemac.com/finance/pdf/October_2014_public_outlook.pdf http://www.fanniemae.com/resources/file/research/emma/pdf/Economic_Forecast_102314.pdf http://www.mortgagebankers.org/files/Bulletin/InternalResource/89713_.pdf http://www.realtor.org/sites/default/files/reports/2014/embargoes/phs-09-29/forecast-10-2014-us-economic-outlook-09-29-2014.16-17 Edelman Berland Survey http://finance.yahoo.com/news/prudential-real-estate-q3-consumer-164800563.html KEEPINGCURRENTMATTERS.COM Slide Slide Title Link 5, 6, 8 Existing Home Sales, Pending Home Sales, http://www.realtor.org 7, 9 Foot Traffic https://magic.piktochart.com/output/3039836-foot-traffic-september-2014?sf5159951=1 10 Mortgage Credit Availability http://www.mba.org/ResearchandForecasts/MCAI.htm 11, 12 Average FICO Score Conv, Average FICO Score FHA https://www.elliemae.com/resources/origination-insight-reports 13 Mel Watt Quote http://www.fhfa.gov/Media/PublicAffairs/Pages/Prepared-Remarks-of-Melvin-L-Watt,-Director,-Federal-Housing-Finance-Agency-14 30 Year Fixed Rate http://www.freddiemac.com/pmms 15 Mortgage Rate Projections 18 30 Year Fixed Rate Projection http://www.freddiemac.com/finance/ehforecast.html 19-22 Cost of Waiting Slides http://www.freddiemac.com/finance/ehforecast.html 23-32 Buyer’s Purchasing Power http://www.keepingcurrentmatters.com/infographics/purchasingpower 33 Historic Mortgage Rates http://www.freddiemac.com/blog/research_and_analysis/20140324_dirt_cheap_to_cheap.html
  24. 24. Resources KEEPINGCURRENTMATTERS.COM Slide Slide Title Link 35, 36 Existing Home Sales, Pending Home Sales, http://www.realtor.org 37-39 Case Shiller http://us.spindices.com/index-family/real-estate/sp-case-shiller 40, 41-43 % Change in Sales by Price Range, Months Inventory, http://www.realtor.org 44 Year-over-Year Inventory http://www.realtor.org 45 %of Distressed Property Sales http://www.realtor.org 49 Joe Pulizzi Quote http://contentmarketinginstitute.com/author/joepulizzi/

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