Frank Gehry designing new Facebook office

Famous architect Frank Gehry is working with Mark Zuckerberg on the new office building for Facebook, see this story for details http://www.bloomberg.com/news/2012-08-24/facebook-gehry-build-idea-factory-for-ripstik-geeks.html.  It sounds like an amazing space that may revolutionize office spaces in the future.

More stories on rising home prices

The Mercury News, via their local Saratoga News, has a couple of good stories about rising home prices in Silicon Valley:

The first one, http://www.mercurynews.com/saratoga/ci_21358602/buyers-priced-out-by-rising-home-cost, talks about how the home affordability index for our valley is dropping as prices rise.  Only about 1/3 of residents in the valley can afford to buy a home according to this index, which is down significantly despite interest rates hitting new lows.

The second story, http://www.mercurynews.com/saratoga/ci_21358606/valleys-million-dollar-home-sales-among-highest-state, talks about the rise in million dollar home sales.  In our area, Saratoga had the second highest level of million dollar plus home sales, behind only Hillsborough, with a 35% increase to 126 homes sold for over $1,000,000.

Housing market nationally looking better

This is a good Economist story about how the national housing market is doing, http://www.economist.com/node/21559923.  We are seeing similar trends here in Silicon Valley, with more cash buyers and investors purchasing homes.  The interesting thing here is that most renters would prefer to own their homes, so perhaps we will see more activity again in a year or two as these investors sell these homes for a profit to their current renters or another family.

Latest data shows market is still very tight

The latest real estate sales data from Trendgraphix shows that the real estate market in Santa Clara County is still very tight, with inventory levels well below last year:


Not surprisingly, pricing is rising with median prices more than 15% above this time last year and 10% above their levels only 2 months ago:

Explanation of CA's Prop 8 on property taxes

Here, http://www.mercurynews.com/bay-area-news/ci_21134921/homeowner-headache-understanding-other-proposition-8?IADID=Search-www.mercurynews.com-www.mercurynews.com, is a good story explaining the impact of Prop. 8 on homeowners tax rates.  This is a big issue in Silicon Valley where many property owners saw the value of their home drop significantly in 2008 but recover this year.

Fixed mortgage rates drop further

Here is one of the reasons for the hot market in real estate, http://www.mercurynews.com/real-estate/ci_21167877/freddie-mac-says-30-year-fixed-mortgage-plunges.  These amazingly low rates, below 3.5% for 30-year fixed and as low as 2.8% for 15-year fixed are also driving a very high level of refinancing by home owners.  For buyers, the key number is monthly payments and these low rates mean that they can buy more expensive homes. 

To illustrate this, assume a buyer can afford a monthly loan payment of $5,000/mo for a property.  At 3.5%, 30-year fixed with 20% down, this buyer could afford to buy a home that cost almost $1.4m (the monthly payment at $1.4m is $5,029).  However if the interest rate was 5%, the same buyer cannot even afford a $1.2m home (where the monthly payment is $5,153).  This buyer can get significantly more house for $200,000, while paying less each month and even overall.

Who wouldn't want to take advantage of these rates if they could?