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 Good morning. Thanks for stopping by and talking about the three things you need to know about real estate in Silicon Valley. I'm Vito Scar, your host. Let's get started. Three things you need to know. The housing bubble, eh, I don't know if it's coming yet or not, but we're showing indicators. I don't know how to show this to you, but this link is in the comments down below, in my description, down below, I want you to see what's going on because they're talking about debt on commercial.

Real estate is coming in. There's a huge amount of debt in commercial real estate, and I'm pretty sure you go to any. Strip mall, any mall, any commercial property. And you see there's a bigger percentage of spaces that are vacant. Banks are not lending on these. If they're per them, assets are not performing.

This means if you have a REIT or a syndicate and you have money stuck in that, you might see a lowering of your asset value. And this could be one of the tipping points right now. You can watch this, and I don't want to get into this too deeply, but this is just something to be aware of because remember, I just added commercial property as one of the tipping points that could upset this whole economy that we.

Our economy is based on, multiple things. Our G D P, gross, etc, gross domestic product, and everything is intermixed and works together. And when one thing falls, it becomes a house of cards. And that's what happened in 2008, 2009, 2010. Our financial industry put loans on real estate and sold toxic assets to the tertiary.

And that collapsed and that broke down everything. And it was a lot of different things. I don't know everything about each of these individual markets, but I can tell you that a lot of these problems that we're seeing, that you see in the news, they're all indicators that it could be a major part of the of a recession.

And they're talking about a soft landing. They're talking about this, the slight recession, this and. It could be really bad. It could be something. So just be prepared. I'm not here to scare you or be chicken little, I'm just telling you this is where it is. This is something that's concerning too because if you look, and I talked about this last week too, inventory is low.

We're just. Sucking wind right now trying to get inventory up and running. I have four listings now that I'm working on, and it takes time to get stuff together and put the, put it on market, et cetera. But it's just one of those things where, yeah, once it gets up on market, then there'll be a feeding frenzy and we'll see what's happening.

Some of the, even the places where we're saying houses are selling quickly, they're taking a little bit longer to, Just because rates are a little higher and just something to be aware of. W I don't have an answer to things you can do. I might come across some other things that we could talk about as options.

Financial Intelligence

And I'll bring in some experts. We'll bring in our experts from financial intelligence so you can see them and talk to them. And then eventually we'll have webinars where you can come in and talk to them and ask questions. US housing indicators. This is across the US, right? This is from US News. I don't know where they get the data.

It's probably from the cons. The consensus, the sentences, I'm sure. But they do this information and what we're seeing is we're seeing a slight pump in March where we saw that, and then we're going to see the market continue to go down because rates will continue to go up. I think we're seeing another quarter-percent rate hike here in the next test in the next month or so.

So we'll see what happens. Hopefully nothing too diabolical. And then the housing bubble thing. Now this is dated October 22, and I know it's like I'm, I keep beating this as a dead horse, that beating the dead horse. But what I want people to understand is that we have a lot of inventory in cars and a lot of loans in cars and people are.

Car Bubble Is Popping 

Cars that they really can't afford. And I keep bringing this up and I swear I was talking about this 10 years ago. The next tipping point was going to be cars in my head 10 years ago. And if you look at this, one of the tipping points is automotive. Subprime defaults 15 to 18% reported defaults, meaning they haven't made payments in over 60 days.

This guy says this article says it's the same thing, right? People paying crazy prices for old pickup trucks with over a hundred thousand miles,

60% of used cars. What does that say? Take out a loan with their first car. Wells Fargo reported a higher loss ratio from auto loans in its most re recent earnings. Call Ally Financial completely from the company, formally known as GMAC before its 2008 Bailout. Saw charge-offs quadruple in the third quarter, fifth third.

Bankcorp, which is Midwest. Fifth, third. Fifth, third. That's one in two-thirds. But what I know is reducing originations, likely writing, seeing the writing on the wall. That means they're stopping writing offers or offering loans to car dealerships so consumers come to buy cars. The. Okay, so car markets are stopping doing the Or tightening loans.

Tightening the loan origination. Which means it makes it more difficult. This article right here is saying commercial, they, inside this article, they're talking about there's, they're not lending on it. And if there's a refinance that's coming they're, making sure that the asset has to perform for them to refinance.

Commercial loans typically are five-year, 10-year loans, and you have to refinance them every five years or two years or three years, and that's just how they work. So yeah, that could be one of the tipping points. And we see fewer and fewer homes being sold old. However, in Santa Clara County, the Bay Area, we're holding ours.

We have very little, inventory all across the, us. But specifically, here, our problem is we have very little inventory. This, if the market crashes, if any of those other issues collapse the economy, then this next part has nothing to do with anything. Our economy and our market will collapse as well.

Not collapse, but contract massively right now. Over the last couple of months, you've been seeing me do this right here. Now this is just from the realtor. The thing right here. You do all of San Jose and it comes up to 258. I put 2 58 here. I did an actual m l s feed from here and I had two, I had 342 homes. So the houses in San Jose are proper.

They're not going to be actually accurate. The realtor.com Trulia, and Zillow, they're not accurate as to the numbers that they're delivering. So just be careful when you see those numbers. These are based on this number right here. So we have 1.4 homes active per square mile, but that's because San Jose has a lot of greenery parks.

We have a prob, we have a lot of parks, right? And for every thousand people we. A quarter of a home per sale. So for every 4,000 people that are in San Jose, we have a house for sale close. Last week we're at 70 and if we looked at yesterday, no, Monday, Santa Clara had 118 closes. Right now, these are two days apart.

But San Jose still takes up the majority of those homes closed in San, in Santa Clara County. Last year we were twice as much, so we're down 50%. The average list price is 1 51 0.53. The average sales price is just a tad bit higher, 1.569 last year, our average this week was 1.9, but our actual average was 1.74. I know it's hard to see.

It looks like last year I didn't do it, or last week I didn't update the week that last year's, so last year's list, price to sales price ratio is one 16, which is on average our list price of the sales price. RA ratio right now is about 3%. Under list price in San Jose High is 1 27. Low is one point or 78%.

42%. 42 of the 258 homes for sale sorry, of, sorry, 42 out of the 70 homes that closed last week were over less price, so over 60% of the homes sold are going for over less price, which is good. There's our market average is 19. This price decreased by 21%, 55 homes. Now this is cumulative over the weeks it's 55.

We had 55 houses going to market and that's quite a bit lower than the last month altogether. But we're on average for the year and we had 20 homes canceled the last month probably cuz of. Overpriced or pricing expectation or wish Pricing is what we call it. TFT is back on market. We had 25 homes cumulative.

I think that was a cumulative fallout of the contract. Wish back means that they're back on market. All right. New homes. We're seeing a huge spike in cancellations there too, and I think it's 20 or 25% of the homes that were in contract. The new homes in the contract are falling outta contract right now.

We're seeing some homes cancel. We're seeing commercial property being an issue. We're seeing the automotive industry as an issue. Is this a time to panic? No. This is a time to be prepared. This is when you gain when you can make your biggest gains. If you're prepared and you're ready to pounce on a market that happens to come down, great.

If you're a first-time buyer, I'm telling you that I think the market's already passed for you, right? We're seeing multiple offers come back right now, and that means the market's picking up when rates go down. We're at 6%. I think 6% yesterday. Five, five and a half percent is the ideal market, is what we're finding out.

6%. You can still buy points and, you can still lower it down to five and a half percent. So people will realize that and they're saying, Hey, I'm just going to go buy a house. I'm just going to buy a house. I'm going to buy a house. And there's more competition. 60% of the houses that closed last week are running the contract.

Where is it?

60% of the houses that closed last week sold for over this price. That means there were multiple offers for the most part. Right?

So we're seeing this more and more. Over the last. Five weeks is way over. 50% of the homes are selling in San Jose over the list price. I have a feeling if you're still a first-time buyer, I think you can still buy a house on the east side where you know I live in Southeast, in South San Jose.

You still have options here. If there's any inventory that's out there, you can buy an alum rock. You can buy in North San Jose. You can buy in Silver Creek, and you can buy in Santa Teresa. You can buy it in Blossom. Those homes still are going, and there are still homes that are on market. And if you're a first-time buyer, by all means, look at First Houses, fresh market, and fresh homes on market.


My, hint to you is to find homes that have been on market for close to 30 days or over, and those that have issues. They're not going to be the perfect house. They might. The leaning tower of pizza, but you don't want to work with those houses. You wanna find overpriced houses, that are maintenance deferred or that are older in, original condition, and then you can make it yours.

Those are the hints that we're telling our people. All right, I'm at 15 minutes on Beto Scacchi with Aba. Thanks for watching. We'll see you out there. 
Vito Scarnecchia Realtor®, Broker, Veteran, Dad 
DRE#: 01407676 Website: abitano.com 
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