This week Realogy (Coldwell Banker Residential Brokerage’s parent company) President Richard Smith met with legislators regarding the need for policy initiatives concerning the real estate industry and the economy as a whole. Specifically, the Business Roundtable (an association of chief executive officers of leading U.S. corporations)— of which Richard is the chair—issued a set of recommendations for the White House and Congress that are aimed at jump starting the housing market in order to stimulate a broader economic recovery.
The Business Roundtable’s recommendations are as follows:
· Keep mortgage interest rates at historically low levels (below 5 percent) for at least one year;
· Expand the current First-Time Homebuyer Tax Credit incentive from the lesser of 10 percent of the purchase price of the home or $8,000 to a higher limit of either 10 percent or $15,000 for all homebuyers, remove the income restrictions and include all primary residence purchases for one full year;
· Conduct a thorough review of current foreclosure mitigation and loan-modification programs in light of rising loan-modification re-default rates;
· Make permanent the current temporary conforming loan limits; and
· Continue to review and strengthen government efforts already underway to review and refine mortgage lending practices.
We believe targeted, demand-side solutions—such as the ones Business Roundtable is recommending—will provide a critical next step for a housing recovery that will help create jobs and boost the economy as a whole. To obtain a copy of the Business Roundtable press release and its Housing Working Group’s detailed recommendations, click here. To read an article that appeared in today’s online edition of The Wall Street Journal containing an interview about the Business Roundtable’s recommendations and why they are crucial to jumpstarting the housing market, click here. We will communicate with you as any legislative opportunities occur for you to contact members of Congress and voice your support—but for now, just know that we appreciate your support and are proud to be part of this initiative.
In other news this week, RealtyTrac released its foreclosure findings with positive news that foreclosure filings dipped 6% in May compared with April. But the news wasn’t all positive as the number is still 18% above this time last year. In California, the picture continues to be a bit more bleak. We are ranked No. 2 out of 50 states in foreclosure filings with 92,249 total filings or one in every 144 households. While the last two months showed a decline with a 4.5% drop from April 2009 to May 2009, the year-over-year number is still a 22.8% increase. For a complete look at the USA Today story that ran on the figures, click here: http://www.usatoday.com/money/economy/housing/2009-06-10-may-home-foreclosures_N.htm#chart.
While none of us are happy to hear about more homes in the foreclosure process, our local markets are telling us that there is sufficient demand for bank-owned properties – most are still receiving multiple offers when they hit the market.
Now let’s take a look at this week in real estate:
East Bay—The Berkeley office reports 40% of our sales this past week had multiple offers. One REO received 22 offers, all cash. Our higher end is also busy. In the $800,000 to $1 million range, we have seven active Berkeley listings and only one month supply; the $1-1.5 million price range has 18 active listings and a 3.6 mo. supply and the $1.5-2million range has 9 properties and a 9 month supply. Castro Valley reports the market continues to deliver multiples and bid wars in the low range markets. Inventory is much needed and there is no shortage of backup offers if a deal falls out. Fremont reports resale activity is picking up. REOs and short sales are still experiencing multiple offers due to low market prices and reduced inventory. Livermore reports two of the three open houses this past weekend were very active with over 25 groups visiting each open house. Inventory of active homes and total pending sales of existing homes in the Tri-Valley area remained stable this past week. Multiple offers continue on homes listed below $500,000! Two REO listings in the office had more than 20 offers on each property. Walnut Creek reports we are experiencing an increase number of sales falling through for various reasons and also at various stages of escrow. The most common reason being "low appraisals". Seven our our REO properties were recently sold to buyers paying "All Cash.” Even though these listings located got multiple offers, often at higher than the "asking price,” the Seller’s "banks" held out for the "All Cash" offer. These properties were located in Pleasant Hill, Concord, Antioch and Vallejo.
Monterey County—No information reported.
North Bay—Our Greenbrae office reported San Rafael and Novato market are hot, hot, hot! San Anselmo, Corte Madera and Greenbrae are also doing well with 30% + in contract. Novato at 46% in contract. Just had multiples on a $1.2mil house in Greenbrae. Appraisals are slowing down a bit plus price adjusting downwards accordingly or the deals fall through. Our San Rafael office is reporting homes priced at market value in Novato and San Rafael are moving quickly. One home listed at $720k in Novato had an accepted offer in less than ten days. Many homes between $300-500k are seeing multiple offers which is driving the prices up. The Santa Rosa office reports there are more real buyers out there than new sellers right now. Inventory is getting tighter below $500,000 and in selected geographical areas above the $500,000.
Peninsula—The Burlingame office reports it seems that there are protracted negotiations on every deal and buyers asking for further seller concessions after they are in contract. We have started to see a few appraisal problems which mostly seem to be the result of out of area appraisers. That being said there is more activity and sales and listings are increasing. Half Moon Bay reports the coast slowed down considerably this past week-either buyers are attending school graduations or watching the interest rats in hopes of them coming down. The Menlo Park El Camino office reports that things are feeling busier. Higher price ranges selling and some real competitiveness among buyers. Loans are still very evasive for many buyers—well-qualified or not. The Palo Alto Downtown office reports the market has been slow again these last 10 days. Although, the Midtown office seems to be busier with the entry level market. The entry level in Mountain View, Santa Clara and Cupertino seems to be relatively strong compared to the months past. The Palo Alto market has slowed down as far as number of sales and the high-end is again quiet. The San Mateo office reports the lower end of the market is hot, with multiple offers. Middle market to $800,000 is also very active. $1mil and up beginning to show life. Loans are still a problem.
San Francisco—The Lombard office reports a slow week, but this week's ratified deals were almost a reflection of the YTD. Three REO sales with multiple offers (up to 10), all over asking. A $1.5m home with multiple counters but with immediate loan problems. And a $2.6m investment deal whose terms were all dictated. The Market Street office reported Agents are writing offers but find they are running in to more competition than in the past few weeks. We are all at the edge of our seats with respect to financing until the deal is closed. Many last minute conditions coming up, not unmanageable but frustrating for our clients. Open house activity is still steady across the city and many unattached clients are looking to make the right connection with an Agent. Our Noriega office reported demand of affordable SFH is high, inventory is low. Buyer’s Agents are writing offers left and right, but most are competing in multiple offer situations. Activity is high; a lot of deals are falling apart over financing. The Van Ness office reports activity is excellent with 18 deals closed this week alone.
Santa Cruz County—Inventory levels continue to lag - south county Watsonville REO inventory is nearly gone, very few homes left and those new properties are receiving multiple offers. Short sales continue to be a big part of our market and our Agents are doing their best keeping these moving forward - and we have been relatively successful thanks to the short sale packages which they are using. Open house activity for the most part has been active.
Silicon Valley—Our Cupertino De Anza office reports we had 11 offers on a small SFR in Blossom Valley. It got bid nicely up. A Sunnyvale home with three offers went pending $20,000 under the list price. Agents are starting to see more attractive terms on some of their offers, even if the prices are not going sky high. Our Cupertino De Anza office reports multiple offers continue to dominate the lower to mid ranged priced homes in our area. We continue to see more buyers come off the fences for the $1.2m to $1.5m range and actively pursuing the homes with quality offers at or just above the asking price. The Los Altos office reports the market is active in most price ranges except for the higher end. We did have one $5M sale that was not on the MLS and is scheduled to close by the end of the month. The San Jose Willow Glen office reports buyers are out there but they may be waiting for prices to drop because it is a buyer’s market. Things have slowed up a bit and probably due to graduations. The Saratoga office reports the office has been buzzing with sales especially over the last two weeks. We finished the month with a fantastic 107 buyer sides. Our over $2 mil market is still very slow.
South County—Gilroy reports the lack of inventory continues to hinder our market. Agents and buyers are frustrated in submitting offers on properties where there are multiple offers in the double digits. Banks need to release more properties in order to keep up with the current demand. The Morgan Hill office reports the dynamics of the market are interesting, but frustrating for buyers and for Agents alike. It seems that only a short time ago, buyers were not buying and yet it was a true buyer’s market. During these past several months, however, buyers are making offers on anything that is priced right and shows well. Multiple offers are the norm. One Agent in the Morgan Hill office made 23 offers for one young couple but were beat out 22 times by higher bids. They have just gone into contract this week on their starter home. Inventory is way down, demand is way up; there just aren't enough moderately priced homes to bring the market into balance.
For a quick look at the Bay Area market for properties over $1,000,000 –here’s what I am seeing:
Monterey and Santa Cruz counties took a month over month decrease in number of sales and a slight decrease in median price. East Bay counties remain fairly flat in number of sales, and in price. San Mateo and Santa Clara counties took a big jump in May; number of sales up 32% over April, and median price highest since April of 2008. Similarly, in San Francisco, median price jumped 27% over prior month to $1,750,000 and highest number of sales since last September. Marin and Sonoma counties had their third monthly increase in number of million+ dollar sales, and a slight increase in median price. The prevailing commentary you’ll hear in any areas that are experiencing increased high-end activity is very careful selection of listing price and great attention to detail for showing condition of the property.
We’ll take a break next week for the Weekly Market Watch, and I’ll be bringing you two weeks of news for the following week.
Until then,
Rick
Rick Turley
Coldwell Banker Residential Brokerage San Francisco Bay Area
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Monday, June 15, 2009
Thursday, June 11, 2009
Weekly Market Watch
Showing Activity In the Entry Level and Mid-Level Markets Continues to Rise
Now that school is almost out, we’re finding many families are starting to look at homes in anticipation of getting settled prior to next school year. Showing activity in many markets has increased considerably.
Sellers are getting their homes on the market and, in general, seem to be quite receptive to staging and pricing strategies. The homes in the entry-level market are moving well if they are in good condition, and if fairly and competitively priced. We are seeing multiple offer situations in most of our first time home buyer markets. The price point for this activity is of course different by county, and by specific MLS zones, but this week as I visited several Santa Clara County and Marin County offices – I was told about numerous multiple offer situations garnering 10 to 20 offers in the $400,000 to $500,000 range. One property listed at $399,000 (in a mid-$400’s neighborhood, I believe) received over 50 offers.
Though we have seen sporadic new activity in the upper end market, it is still relatively slow for properties over $2M. The month’s supply of inventory for high end properties is more than triple that of homes listed under $800,000. Having said that, we also need to make note of the current momentum we’re starting to see in our offices in the high end. Just looking at one particular day this week, among many other sales, we closed escrow on homes ranging from $1.7M to $2.7M in Palo Alto, Carmel, and Mill Valley, and a home in Los Altos Hills just shy of $3M.
This week LORE Magazine and the Wall Street Journal released their 2008 Top 400 Realtor list. You may view it online at http://online.wsj.com/ad/top400-articlecontinued.html. I'm very proud that we have an impressive number of SF Bay Area Coldwell Banker sales associates who were recognized within this coveted ranking, and for that—along with all of their hard work and dedication, we salute them.
The most notable news this week was The Mortgage Bankers Association’s (MBA) release of is Weekly Mortgage Applications Survey for the week ending May 29, 2009. The Market Composite Index, a measure of mortgage loan application volume, was 658.7, a decrease of 16.2 percent on a seasonally adjusted basis from 786.0 one week earlier but was 14.4% higher than the same week a year ago. This increase is due, largely in part to the first time home buyer market which, as we know, has been vastly stimulated by low interest rates, the $8,000 first time home buyer tax credit and increased affordability. Together these incentives are finally getting buyers in the first time home buyer market off the fence and into the market which is why we are starting to see some price stabilization at this level.
While entry level prices currently seem to be on an upward trajectory, it will take some time to return to the median price levels of our pre-recession market. A recent study notes that US real estate is now as affordable as it has been in the past 38 years (this of course relates to median homes when compared to median mortgage rates and incomes). The fact is, the peak of unaffordability was in 2006, when an average family in the United States needed to spend 44% of their monthly income toward the purchase of an average single family home.
A couple of other interesting articles of note this week:
- RISMedia’s First Time Home Buyers Grabbing Houses and Tax Credit (http://rismedia.com/2009-06-03/first-time-home-buyers-grabbing-houses-and-tax-credit/)
- Realty Times Multifamily Builder Confidence Up From Record Lows; Interest From Prospective Renters and Buyers Rises (http://realtytimes.com/rtpages/20090603_confidenceup.htm)
- Realtor.org Pending Home Sales Up For Three Months in a Row (http://www.realtor.org/press_room/news_releases/2009/06/phs_up)
Now, let’s take a look at this week in real estate:
East Bay—Berkeley reports we were inundated with multiple offers this week and large turnouts at open houses. 75% of our deals this week saw multiple offers, any number from 2-8 on seller owned and 12-18 on bank owned. Cash is still king on many deals because of increasing anxiety about appraisals. Castro Valley reports we are still facing an inventory shortage here in our micromarket. We are seeing cash offers everywhere and one Agent reports that she has been outbid from the last five offers she has written by all cash deals. The number of multiples in the low range markets has been in the range of 10-60 offers, to give you an idea as to the inventory shortage we are facing here in our micromarket. Agents are waiting for banks to release more REOs. One thing is certain, we are definitely a recovering market. The Danville office reported the activity level is good but we need more inventory. Lots of buyers are jumping off the fence. The Fremont office is reporting the market is becoming competitive in the Tri-City area. The listing inventory is reducing. The Livermore office reports our pending sales are up in the office and the overall market in the Tri-Valley area remains strong. Multiple offers are still the rage below $500,000. The Pleasanton office reports homes under $450K are moving very fast with multiple offers.
Monterey County—Market continues to have lots of activity in the lower price ranges and slower as price range goes up, as only 25 properties in Carmel and Pebble Beach have sold for over $2 million in the first five months of this year, with highest at almost $8 million. As is typical for end of the month, we had a good week for closings, even though Monday was a holiday, with 14 closed sales ranging in price from an incredibly low $128,000 in Seaside to a lot in Tehama at $1,325,000.
North Bay—The Petaluma office reports that the frenzy continues as buyers compete for entry level homes that are in the $200-$400k (2 years ago were $500-$600k) across the board these homes have multiple offers and are typically going into escrow over the asking price. One home on the west side of Petaluma had 32 offers and went $80,000 plus over asking. With inventory shrinking and more buyers entering the market we are seeing an upswing in median price in this segment of the market (under $500,000). Is this the bottom in that price range? Looking for more inventory REO or otherwise. The $500-700k market is starting to pick up. Inventory in the million dollar plus market is accumulating fast. Not as many buyers in that market. But there are some circling. Our San Rafael office reports there has been an increase in multiple offers over the past week in the price point of $300-500k in San Rafael and Novato. We ratified an offer on a home listed in Novato for $2.1mil. Our Southern Marin office reports quite a week in So. Marin, from a $2,725,000 Mill Valley closing where we represented both ends, to six offers on a $679k Corte Madera listing in our office. For the first 5 months of the year, Mill Valley is 24% down in sold units vs. same period a year ago and 18% down in average sales price, Sausalito is 43% down in units vs same period a year ago, and 15% down in average sales price and Tiburon is 57% down in sold units and 2.4% down in average sales price.
Peninsula—The Agents feel that we may be seeing the bottom in the North County and in the lower price points. The inventory has been greatly reduced in these areas and multiple offers have become the norm. The $1mil to $2.5 range is still slower and many buyers are concerned with availability of mortgage money. We still are seeing cash buyers however and others with large down payments. Our Menlo Park El Camino office reports we are still getting multiples on low end and well priced properties. Some Agents feel that buyers are beginning to realize what great rates are out there and afraid they are going to go away. They want sales contingent on COE not just a sale of their properties. Sellers will take LOWER offers if they feel it has a higher chance of closing. Very cautious clients, very risk-averse. Our Menlo Park Santa Cruz Avenue office reports one sale in Menlo Park (list price $799k) which sold with four offers and went substantially over list. Good feedback from Agents who held open houses. Buyers are out in full force. Palo Alto reports the following year to year comparison: The first three months of this year were slower, as far as closed sales compared with the first three months of last year. Months four and five of last year were actually slower than months four and five this year. Yet, we are one closed escrow short of last year per the MLS here in Palo Alto. Hopefully optimistic a trend going up.
San Francisco—The Lombard office reports the lower the price the more offers. As price goes up flawed properties and not price presented well are sitting. A couple of investment property closings this week, and completing the financing was extremely difficult. The Market Street office reports multiple offers were the order of the day with mostly two offers, but one received three and one received four. Negotiations in most cases are still lengthy. Great traffic at open houses over the weekend and Agents are seeing more private showings. Buyers are coming back three and four times before writing the offer.
Santa Cruz County—Agents are busy writing offers and June is starting out to be a stronger month than we have had the past few months. Inventory levels remain low; we are seeing multiple offers on homes that are not bank owned. Short sales continue to be a big part of the market and the timeframes remain slow and cumbersome for moving through the process in most cases. We know the pent up buyer demand is there and as rates start to creep up - it may bring more of them to the table ready to write.
Silicon Valley—Our Cupertino DeAnza office reported Agents are frustrated dealing with REO/Short Sale listing Agents who don't return calls or emails. On a positive note, we had a number of sales over $1M and one over $2M. Our Los Altos office reported buyers are making offers on the lower end homes. The higher end price tiers are slower in both the condo and single family homes. The San Jose Almaden office reported inventory is still shrinking and bringing more pressure to bear on our low end market in every area. I hear of multiple offers in all parts of our county. From Los Altos to Gilroy, it is not just limited to REO bargains anymore. The only criteria are that it has to be priced for this year’s market—not previous years. One traditional sale in Sunnyvale sold for 2% above list in as many days with back up offers in place, high $800,000 price range. Of those who report to me on open homes, I hear they’re busy. Time is running out for the first time buyers who are waiting for whatever… prices to drop, interest rates to fall further or more government concessions. Bottom was two months ago and we need to get that word out! Our San Jose Main office reports activity continues to be brisk in the lower price range of $250K to $550K with multiple offers on many properties. Activity in the upper price range is slow. Open houses in all price ranges were very active this past weekend. Increase in interest rates the past week may slow our current busy market.
South County—The real estate business cycle here in the South County has remained unchanged for the last several months. Entry level (investment properties) priced between $300,000 and $400,000 are selling with multiple offers. Upper end homes are still languishing on the market. Inventory is decreasing and demand remains high. This may result in prices (and values) moving upward.
It seems we’ve enjoyed another week in SF Bay Area real estate much like the past several weeks; stabilizing if not increasing prices in the entry level, and a nice up-tick in the mid and higher price points. The delayed Spring selling season continues – at least for another week.
All the Best,
Rick
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
tel 415.437.4505
Now that school is almost out, we’re finding many families are starting to look at homes in anticipation of getting settled prior to next school year. Showing activity in many markets has increased considerably.
Sellers are getting their homes on the market and, in general, seem to be quite receptive to staging and pricing strategies. The homes in the entry-level market are moving well if they are in good condition, and if fairly and competitively priced. We are seeing multiple offer situations in most of our first time home buyer markets. The price point for this activity is of course different by county, and by specific MLS zones, but this week as I visited several Santa Clara County and Marin County offices – I was told about numerous multiple offer situations garnering 10 to 20 offers in the $400,000 to $500,000 range. One property listed at $399,000 (in a mid-$400’s neighborhood, I believe) received over 50 offers.
Though we have seen sporadic new activity in the upper end market, it is still relatively slow for properties over $2M. The month’s supply of inventory for high end properties is more than triple that of homes listed under $800,000. Having said that, we also need to make note of the current momentum we’re starting to see in our offices in the high end. Just looking at one particular day this week, among many other sales, we closed escrow on homes ranging from $1.7M to $2.7M in Palo Alto, Carmel, and Mill Valley, and a home in Los Altos Hills just shy of $3M.
This week LORE Magazine and the Wall Street Journal released their 2008 Top 400 Realtor list. You may view it online at http://online.wsj.com/ad/top400-articlecontinued.html. I'm very proud that we have an impressive number of SF Bay Area Coldwell Banker sales associates who were recognized within this coveted ranking, and for that—along with all of their hard work and dedication, we salute them.
The most notable news this week was The Mortgage Bankers Association’s (MBA) release of is Weekly Mortgage Applications Survey for the week ending May 29, 2009. The Market Composite Index, a measure of mortgage loan application volume, was 658.7, a decrease of 16.2 percent on a seasonally adjusted basis from 786.0 one week earlier but was 14.4% higher than the same week a year ago. This increase is due, largely in part to the first time home buyer market which, as we know, has been vastly stimulated by low interest rates, the $8,000 first time home buyer tax credit and increased affordability. Together these incentives are finally getting buyers in the first time home buyer market off the fence and into the market which is why we are starting to see some price stabilization at this level.
While entry level prices currently seem to be on an upward trajectory, it will take some time to return to the median price levels of our pre-recession market. A recent study notes that US real estate is now as affordable as it has been in the past 38 years (this of course relates to median homes when compared to median mortgage rates and incomes). The fact is, the peak of unaffordability was in 2006, when an average family in the United States needed to spend 44% of their monthly income toward the purchase of an average single family home.
A couple of other interesting articles of note this week:
- RISMedia’s First Time Home Buyers Grabbing Houses and Tax Credit (http://rismedia.com/2009-06-03/first-time-home-buyers-grabbing-houses-and-tax-credit/)
- Realty Times Multifamily Builder Confidence Up From Record Lows; Interest From Prospective Renters and Buyers Rises (http://realtytimes.com/rtpages/20090603_confidenceup.htm)
- Realtor.org Pending Home Sales Up For Three Months in a Row (http://www.realtor.org/press_room/news_releases/2009/06/phs_up)
Now, let’s take a look at this week in real estate:
East Bay—Berkeley reports we were inundated with multiple offers this week and large turnouts at open houses. 75% of our deals this week saw multiple offers, any number from 2-8 on seller owned and 12-18 on bank owned. Cash is still king on many deals because of increasing anxiety about appraisals. Castro Valley reports we are still facing an inventory shortage here in our micromarket. We are seeing cash offers everywhere and one Agent reports that she has been outbid from the last five offers she has written by all cash deals. The number of multiples in the low range markets has been in the range of 10-60 offers, to give you an idea as to the inventory shortage we are facing here in our micromarket. Agents are waiting for banks to release more REOs. One thing is certain, we are definitely a recovering market. The Danville office reported the activity level is good but we need more inventory. Lots of buyers are jumping off the fence. The Fremont office is reporting the market is becoming competitive in the Tri-City area. The listing inventory is reducing. The Livermore office reports our pending sales are up in the office and the overall market in the Tri-Valley area remains strong. Multiple offers are still the rage below $500,000. The Pleasanton office reports homes under $450K are moving very fast with multiple offers.
Monterey County—Market continues to have lots of activity in the lower price ranges and slower as price range goes up, as only 25 properties in Carmel and Pebble Beach have sold for over $2 million in the first five months of this year, with highest at almost $8 million. As is typical for end of the month, we had a good week for closings, even though Monday was a holiday, with 14 closed sales ranging in price from an incredibly low $128,000 in Seaside to a lot in Tehama at $1,325,000.
North Bay—The Petaluma office reports that the frenzy continues as buyers compete for entry level homes that are in the $200-$400k (2 years ago were $500-$600k) across the board these homes have multiple offers and are typically going into escrow over the asking price. One home on the west side of Petaluma had 32 offers and went $80,000 plus over asking. With inventory shrinking and more buyers entering the market we are seeing an upswing in median price in this segment of the market (under $500,000). Is this the bottom in that price range? Looking for more inventory REO or otherwise. The $500-700k market is starting to pick up. Inventory in the million dollar plus market is accumulating fast. Not as many buyers in that market. But there are some circling. Our San Rafael office reports there has been an increase in multiple offers over the past week in the price point of $300-500k in San Rafael and Novato. We ratified an offer on a home listed in Novato for $2.1mil. Our Southern Marin office reports quite a week in So. Marin, from a $2,725,000 Mill Valley closing where we represented both ends, to six offers on a $679k Corte Madera listing in our office. For the first 5 months of the year, Mill Valley is 24% down in sold units vs. same period a year ago and 18% down in average sales price, Sausalito is 43% down in units vs same period a year ago, and 15% down in average sales price and Tiburon is 57% down in sold units and 2.4% down in average sales price.
Peninsula—The Agents feel that we may be seeing the bottom in the North County and in the lower price points. The inventory has been greatly reduced in these areas and multiple offers have become the norm. The $1mil to $2.5 range is still slower and many buyers are concerned with availability of mortgage money. We still are seeing cash buyers however and others with large down payments. Our Menlo Park El Camino office reports we are still getting multiples on low end and well priced properties. Some Agents feel that buyers are beginning to realize what great rates are out there and afraid they are going to go away. They want sales contingent on COE not just a sale of their properties. Sellers will take LOWER offers if they feel it has a higher chance of closing. Very cautious clients, very risk-averse. Our Menlo Park Santa Cruz Avenue office reports one sale in Menlo Park (list price $799k) which sold with four offers and went substantially over list. Good feedback from Agents who held open houses. Buyers are out in full force. Palo Alto reports the following year to year comparison: The first three months of this year were slower, as far as closed sales compared with the first three months of last year. Months four and five of last year were actually slower than months four and five this year. Yet, we are one closed escrow short of last year per the MLS here in Palo Alto. Hopefully optimistic a trend going up.
San Francisco—The Lombard office reports the lower the price the more offers. As price goes up flawed properties and not price presented well are sitting. A couple of investment property closings this week, and completing the financing was extremely difficult. The Market Street office reports multiple offers were the order of the day with mostly two offers, but one received three and one received four. Negotiations in most cases are still lengthy. Great traffic at open houses over the weekend and Agents are seeing more private showings. Buyers are coming back three and four times before writing the offer.
Santa Cruz County—Agents are busy writing offers and June is starting out to be a stronger month than we have had the past few months. Inventory levels remain low; we are seeing multiple offers on homes that are not bank owned. Short sales continue to be a big part of the market and the timeframes remain slow and cumbersome for moving through the process in most cases. We know the pent up buyer demand is there and as rates start to creep up - it may bring more of them to the table ready to write.
Silicon Valley—Our Cupertino DeAnza office reported Agents are frustrated dealing with REO/Short Sale listing Agents who don't return calls or emails. On a positive note, we had a number of sales over $1M and one over $2M. Our Los Altos office reported buyers are making offers on the lower end homes. The higher end price tiers are slower in both the condo and single family homes. The San Jose Almaden office reported inventory is still shrinking and bringing more pressure to bear on our low end market in every area. I hear of multiple offers in all parts of our county. From Los Altos to Gilroy, it is not just limited to REO bargains anymore. The only criteria are that it has to be priced for this year’s market—not previous years. One traditional sale in Sunnyvale sold for 2% above list in as many days with back up offers in place, high $800,000 price range. Of those who report to me on open homes, I hear they’re busy. Time is running out for the first time buyers who are waiting for whatever… prices to drop, interest rates to fall further or more government concessions. Bottom was two months ago and we need to get that word out! Our San Jose Main office reports activity continues to be brisk in the lower price range of $250K to $550K with multiple offers on many properties. Activity in the upper price range is slow. Open houses in all price ranges were very active this past weekend. Increase in interest rates the past week may slow our current busy market.
South County—The real estate business cycle here in the South County has remained unchanged for the last several months. Entry level (investment properties) priced between $300,000 and $400,000 are selling with multiple offers. Upper end homes are still languishing on the market. Inventory is decreasing and demand remains high. This may result in prices (and values) moving upward.
It seems we’ve enjoyed another week in SF Bay Area real estate much like the past several weeks; stabilizing if not increasing prices in the entry level, and a nice up-tick in the mid and higher price points. The delayed Spring selling season continues – at least for another week.
All the Best,
Rick
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
tel 415.437.4505
Weekly Market Watch
Memorial Day is Over…but will it be a typical Summer Real Estate Season?
Memorial Day is behind us and the traditionally moderate summer selling season has begun. Some of our offices are saying that it’s feeling more like a late Spring season right now. Activity is fairly brisk – it goes without saying that the entry level is hot – short on listing inventory and high on Buyer demand, but there is also good activity to report in the mid-to- high end in most communities.
This week NAR announced that existing home sales rose in April with strong buyer activity, as expected, in the lower price ranges. Nationally, existing home sales increased 2.9% to a seasonally adjusted annual rate of 4.68 million units in April from a downwardly revised pace of 4.55 million units in March, but were 3.5 percent below that 4.85 million-unit level in April 2008.
While most of the sales are taking place in lower price ranges, we are seeing increased activity in the mid-priced markets. This is a domino effect; a turnaround begins with the lower price range homes and once that sector of the market is stabilized, we begin to see changes in the mid and upper price ranges. The upper end, while most recently seeing increased activity, still is considered a Buyer’s market. This seems to be fairly consistent in major Metros on both coasts.
Across most of our local MLS’s, there is approximately an average of 14+ month’s supply of homes over $2 million. This is about twice the inventory for the same period last year. Just the opposite has occurred in the <$800k market. Estimating the average month’s supply of homes across several MLS’s in this price range, we are seeing about 3 months or less – which is half of what we had this time last year – and is considered to be a Seller’s market. If you look at the same months where inventory has shrunk in the entry level – you’ll see stabilizing prices, and in some areas, increasing home values. And of course the higher end has seen declining median price as inventory has been building. This appears to be the perfect opportunity for the move up Buyer – they have a fairly captive audience for selling, and are coming from a better position to negotiate on the buying side.
It’s also important to note that investors reacted to concerns about the mounting size of our national debt this week. The yield on the 10 year T-bill increased mid-week as stocks took a hit, and interest rates for mortgages were affected by a ½ to full one percent increase. Since purchasing power decreases with a rise in interest rates, some Buyers will have an increased sense of urgency to get a signed contract on their new home.
You’ll find links to some interesting real estate stories from this week below:
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/05/28/financial/f070602D30.DTL&hw=real+estate&sn=002&sc=842
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/05/28/financial/f110028D09.DTL&hw=real+estate&sn=003&sc=766
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/05/28/BUJT17S3B2.DTL&hw=real+estate&sn=008&sc=607
http://sanjose.bizjournals.com/sanjose/stories/2009/05/25/daily47.html
Now, here’s a look at our week in real estate:
East Bay—Berkeley reports five of our last seven deals had multiple offers, from two or three on each to up to 12 on a wide range of asking prices. Among the lower end and REO market, the highest cash offer gets the property. One Richmond REO listing of ours received six cash offers. Castro Valley reports many Agents are saying we are back to the 2003 market. Multiple offers, frenzy of activity, houses going pending within a few days of listing. Some agents feel as though we are on the incline at this point, that we have turned the corner and the "bottom of the market is now behind us.” Danville reports Agents are getting frustrated. They are running into lots of multiple offers and having trouble getting buyers into contract. This is going on in price ranges up to about $600,000. One property in San Ramon priced at $613,000 got 30 offers this past week. Meanwhile the high end continues to slumber. Livermore reports the Tri Valley Market continues to improve each week as active listings in all three cities, Livermore, Pleasanton and Dublin declined and total pending sales in all three cities increased this past week. Orinda reports strong sales market this week with buyers ready to make offers.
Monterey County—Activity in lower price ranges continues on at a very active pace, but not the higher luxury-home price range, where we the inventory is mounting up. The last three weeks have been slow in closings for us; however, we've opened 52 new escrows in that time, which is a very positive sign for us.
North Bay—Greenbrae reports more deals going into contract, but also a bit of an increase in deals falling through. Negotiations are critical to keeping deals together. San Rafael reports a home listed in the low $700s in San Rafael went into escrow after less than a week on the market with a back up offer in place! Open houses are busy with plenty of buyers at all price points. The Petaluma office was involved in 19 multiple offer situations. Although our inventory is shrinking and multiple offers continue. The multiple offers are two and three in numbers and only one in double digits. Agents are working with multiple buyers. Interesting enough, six of the multiple offers were on properties with days on the market of 50,75,90,130,400+. Properties in the $500,000 range and up are starting to see activity. Sebastopol reports few lookers at higher priced inventory. As the lower priced homes sell with the dearth of low priced inventory we have seen a real slowdown.
Peninsula—Half Moon Bay reports a slower week with the long weekend. Listings inventory is picking up. 168 active SFR listings on the coast with only 24 pending sales; we need some serious price adjustments. Menlo Park Santa Cruz reports many Agents took advantage of the Memorial Day holiday and took time off. We were feeling some energy in the market w/some sales activity last week. Hopefully the holiday didn’t dampen the momentum. Palo Alto reports if priced well in the Palo Alto marketplace, from downtown to S. Palo Alto, we are experiencing an unusual amount of multiple offers. Almost every property priced well will have multiple offers and prices that exceed the list price from $800k to $3M. Open houses are double and triple what they have normally been-even over the holiday weekend. A lot of optimism in the Palo Alto marketplace. The volume is still low but the activity intense. San Mateo reports inventory six months ago in Daly City was over 300, today its is about 60. San Bruno & So. SF are experiencing the same. We might be building a solid base as many properties are selling in those areas with multiple offers that are not short sales or foreclosures.
San Francisco—The Lakeside office reports there seems to be a huge backlog at the banks. Many conforming rate FHA loans are being drawn out way past the estimated close of escrow date. Every deal is complicated by the new lending practices that are being implemented. The Lombard office reported the market is picking up steam. Multiple offers are on the heels of healthy price reductions or aggressively priced fresh listings. Most activity is under $1m. Still numerous escrows problems—mostly related to financing. The Van Ness office reports some very exciting news in the upper end arena.. In fact, we closed 13 deals for over $15,000,000. There is about the same activity for +million and -million. Strong activity continues. Our Noriega office reports we had a busy week as far as pending sales is concerned. But we really need more listings in the entry level.
Santa Cruz County—Still no word on any new REO business. This is a mystery. South county inventory is depleted and buyers are now competing on most of the lower end properties. Overall the market seems to be picking up and we are seeing multiple offers on some well priced properties under $800K, especially close to the beach. There are more positive indicators in the news, consumer confidence is up and this is lending to a more favorable real estate climate overall.
Silicon Valley—San Jose Almaden reports low end continues to drive the market. Buyers are frustrated at losing out in multiple offer situations. Some homes going 25-30% over list price. San Jose Main reports inventory continues to drop as homes in the mid to low price range sell fairly quick, many with multiple offers. Low interest rates and signs that the mid range properties and below have bottomed out are fueling sales. Slower than average open house traffic this past weekend probably due to the 3 day holiday. San Jose Willow Glen reports we are busy and multiple offers are starting again. Buyers are apparently feeling more secure about the market. Good energy in the office as well. Saratoga reports we had two sales over $3 million turned in last week. Hopefully, this is a sign of an improving Previews price point.
South County—Our Gilroy office reports local inventory continues to shrink. As of today there are 146 active single family homes. 23 are bank owned, 42 are short sales and 81 have an equity position. Of the 81 there are only 9 homes listed under 500k and 40 over 1mil. Hollister reports multiple offers still a norm on most REO listings. Office activity is quiet this weekend due to the holiday. Open house activity is increasing. Short sale listings have increased. The Morgan Hill office reports the South County market remains interesting in that demand is strong for entry level homes. Great prices, coupled with tax incentives and attractive mortgage rates have stimulated this segment of the market. More importantly, Agents are reporting that optimism has replaced pessimism on the part of the buying public.
Historically speaking the week of Memorial Day quiets things down in the housing sector but this year it was a bit different. Thanks to the $8,000 first time home buyer credit, low interest rates and increased affordability, buyers in the first time home buyer market are out in droves and really are snatching up properties. It seems they have been pushing activity into the mid and higher price ranges as well. If it is truly a late Spring flurry this year, we could be in for a very busy Summer.
Until next week,
Make it a great one,
Rick
Rick Turley
Coldwell Banker Residential Brokerage San Francisco Bay Area
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Memorial Day is behind us and the traditionally moderate summer selling season has begun. Some of our offices are saying that it’s feeling more like a late Spring season right now. Activity is fairly brisk – it goes without saying that the entry level is hot – short on listing inventory and high on Buyer demand, but there is also good activity to report in the mid-to- high end in most communities.
This week NAR announced that existing home sales rose in April with strong buyer activity, as expected, in the lower price ranges. Nationally, existing home sales increased 2.9% to a seasonally adjusted annual rate of 4.68 million units in April from a downwardly revised pace of 4.55 million units in March, but were 3.5 percent below that 4.85 million-unit level in April 2008.
While most of the sales are taking place in lower price ranges, we are seeing increased activity in the mid-priced markets. This is a domino effect; a turnaround begins with the lower price range homes and once that sector of the market is stabilized, we begin to see changes in the mid and upper price ranges. The upper end, while most recently seeing increased activity, still is considered a Buyer’s market. This seems to be fairly consistent in major Metros on both coasts.
Across most of our local MLS’s, there is approximately an average of 14+ month’s supply of homes over $2 million. This is about twice the inventory for the same period last year. Just the opposite has occurred in the <$800k market. Estimating the average month’s supply of homes across several MLS’s in this price range, we are seeing about 3 months or less – which is half of what we had this time last year – and is considered to be a Seller’s market. If you look at the same months where inventory has shrunk in the entry level – you’ll see stabilizing prices, and in some areas, increasing home values. And of course the higher end has seen declining median price as inventory has been building. This appears to be the perfect opportunity for the move up Buyer – they have a fairly captive audience for selling, and are coming from a better position to negotiate on the buying side.
It’s also important to note that investors reacted to concerns about the mounting size of our national debt this week. The yield on the 10 year T-bill increased mid-week as stocks took a hit, and interest rates for mortgages were affected by a ½ to full one percent increase. Since purchasing power decreases with a rise in interest rates, some Buyers will have an increased sense of urgency to get a signed contract on their new home.
You’ll find links to some interesting real estate stories from this week below:
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/05/28/financial/f070602D30.DTL&hw=real+estate&sn=002&sc=842
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/05/28/financial/f110028D09.DTL&hw=real+estate&sn=003&sc=766
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/05/28/BUJT17S3B2.DTL&hw=real+estate&sn=008&sc=607
http://sanjose.bizjournals.com/sanjose/stories/2009/05/25/daily47.html
Now, here’s a look at our week in real estate:
East Bay—Berkeley reports five of our last seven deals had multiple offers, from two or three on each to up to 12 on a wide range of asking prices. Among the lower end and REO market, the highest cash offer gets the property. One Richmond REO listing of ours received six cash offers. Castro Valley reports many Agents are saying we are back to the 2003 market. Multiple offers, frenzy of activity, houses going pending within a few days of listing. Some agents feel as though we are on the incline at this point, that we have turned the corner and the "bottom of the market is now behind us.” Danville reports Agents are getting frustrated. They are running into lots of multiple offers and having trouble getting buyers into contract. This is going on in price ranges up to about $600,000. One property in San Ramon priced at $613,000 got 30 offers this past week. Meanwhile the high end continues to slumber. Livermore reports the Tri Valley Market continues to improve each week as active listings in all three cities, Livermore, Pleasanton and Dublin declined and total pending sales in all three cities increased this past week. Orinda reports strong sales market this week with buyers ready to make offers.
Monterey County—Activity in lower price ranges continues on at a very active pace, but not the higher luxury-home price range, where we the inventory is mounting up. The last three weeks have been slow in closings for us; however, we've opened 52 new escrows in that time, which is a very positive sign for us.
North Bay—Greenbrae reports more deals going into contract, but also a bit of an increase in deals falling through. Negotiations are critical to keeping deals together. San Rafael reports a home listed in the low $700s in San Rafael went into escrow after less than a week on the market with a back up offer in place! Open houses are busy with plenty of buyers at all price points. The Petaluma office was involved in 19 multiple offer situations. Although our inventory is shrinking and multiple offers continue. The multiple offers are two and three in numbers and only one in double digits. Agents are working with multiple buyers. Interesting enough, six of the multiple offers were on properties with days on the market of 50,75,90,130,400+. Properties in the $500,000 range and up are starting to see activity. Sebastopol reports few lookers at higher priced inventory. As the lower priced homes sell with the dearth of low priced inventory we have seen a real slowdown.
Peninsula—Half Moon Bay reports a slower week with the long weekend. Listings inventory is picking up. 168 active SFR listings on the coast with only 24 pending sales; we need some serious price adjustments. Menlo Park Santa Cruz reports many Agents took advantage of the Memorial Day holiday and took time off. We were feeling some energy in the market w/some sales activity last week. Hopefully the holiday didn’t dampen the momentum. Palo Alto reports if priced well in the Palo Alto marketplace, from downtown to S. Palo Alto, we are experiencing an unusual amount of multiple offers. Almost every property priced well will have multiple offers and prices that exceed the list price from $800k to $3M. Open houses are double and triple what they have normally been-even over the holiday weekend. A lot of optimism in the Palo Alto marketplace. The volume is still low but the activity intense. San Mateo reports inventory six months ago in Daly City was over 300, today its is about 60. San Bruno & So. SF are experiencing the same. We might be building a solid base as many properties are selling in those areas with multiple offers that are not short sales or foreclosures.
San Francisco—The Lakeside office reports there seems to be a huge backlog at the banks. Many conforming rate FHA loans are being drawn out way past the estimated close of escrow date. Every deal is complicated by the new lending practices that are being implemented. The Lombard office reported the market is picking up steam. Multiple offers are on the heels of healthy price reductions or aggressively priced fresh listings. Most activity is under $1m. Still numerous escrows problems—mostly related to financing. The Van Ness office reports some very exciting news in the upper end arena.. In fact, we closed 13 deals for over $15,000,000. There is about the same activity for +million and -million. Strong activity continues. Our Noriega office reports we had a busy week as far as pending sales is concerned. But we really need more listings in the entry level.
Santa Cruz County—Still no word on any new REO business. This is a mystery. South county inventory is depleted and buyers are now competing on most of the lower end properties. Overall the market seems to be picking up and we are seeing multiple offers on some well priced properties under $800K, especially close to the beach. There are more positive indicators in the news, consumer confidence is up and this is lending to a more favorable real estate climate overall.
Silicon Valley—San Jose Almaden reports low end continues to drive the market. Buyers are frustrated at losing out in multiple offer situations. Some homes going 25-30% over list price. San Jose Main reports inventory continues to drop as homes in the mid to low price range sell fairly quick, many with multiple offers. Low interest rates and signs that the mid range properties and below have bottomed out are fueling sales. Slower than average open house traffic this past weekend probably due to the 3 day holiday. San Jose Willow Glen reports we are busy and multiple offers are starting again. Buyers are apparently feeling more secure about the market. Good energy in the office as well. Saratoga reports we had two sales over $3 million turned in last week. Hopefully, this is a sign of an improving Previews price point.
South County—Our Gilroy office reports local inventory continues to shrink. As of today there are 146 active single family homes. 23 are bank owned, 42 are short sales and 81 have an equity position. Of the 81 there are only 9 homes listed under 500k and 40 over 1mil. Hollister reports multiple offers still a norm on most REO listings. Office activity is quiet this weekend due to the holiday. Open house activity is increasing. Short sale listings have increased. The Morgan Hill office reports the South County market remains interesting in that demand is strong for entry level homes. Great prices, coupled with tax incentives and attractive mortgage rates have stimulated this segment of the market. More importantly, Agents are reporting that optimism has replaced pessimism on the part of the buying public.
Historically speaking the week of Memorial Day quiets things down in the housing sector but this year it was a bit different. Thanks to the $8,000 first time home buyer credit, low interest rates and increased affordability, buyers in the first time home buyer market are out in droves and really are snatching up properties. It seems they have been pushing activity into the mid and higher price ranges as well. If it is truly a late Spring flurry this year, we could be in for a very busy Summer.
Until next week,
Make it a great one,
Rick
Rick Turley
Coldwell Banker Residential Brokerage San Francisco Bay Area
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Wednesday, May 27, 2009
Weekly Market Watch
NAR Announces Housing Affordability Highest in 18 Years – And Many Offices Report Increased Activity in High End Sales
For months I’ve been sharing that this is one of the best times to purchase a home in decades. This week the National Association of Realtors underscored that fact –stating that nationwide housing affordability jumped 10 percentage points during the first quarter of 2009 to its highest level since the series began 18 years ago, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI). The HOI showed that 72.5% of all new and existing US homes sold in the first quarter of 2009 were affordable to families earning the national median income of $64,000, up from 62.4% during the previous quarter and up from 53.8% during the first quarter of 2008.
Locally, the story is much more dramatic. In the San Francisco-Peninsula area, 32% of all new and existing homes sold in the first quarter of 2009 were considered affordable to families earning the area’s median income of $96,800. That’s up 60% from the previous quarter and up an incredible 146% from a year ago, when the index was a paltry 13%, one of the lowest affordability ratios in the United States.
Follow the link below to get the historical charts and details on North Bay, East Bay, Silicon Valley, and Santa Cruz, as well as many other Metros in the US.
.
http://www.nahb.org/page.aspx/category/sectionID=135
Below you’ll find a few more news stories of interest from the week:
http://rismedia.com/2009-05-20/buyer-interest-in-foreclosures-spikes-says-survey/
http://www.nytimes.com/aponline/2009/05/19/us/politics/AP-US-Economy.html?_r=2&scp=17&sq=housing&st=nyt
http://rismedia.com/2009-05-18/distressed-properties-and-first-time-home-buyers-the-recipe-for-real-estate-recovery/
Many of you have asked me questions about the potential changes in the $8,000 first time buyer tax credit (http://www.realtor.org/RMODaily.nsf/pages/News2009051202?OpenDocument). Essentially the U.S. Department of Housing and Urban development announced on May 12th that the Federal Housing Administration would permit its lenders to allow home buyers to use the $8,000 first-time homebuyer tax credit as a down payment. FHA's approved lenders would be permitted to "monetize" the tax credit through short-term bridge loans. This would allow eligible buyers to access the funds immediately at the closing table. Here is a CNN Money article which explains some of the details: http://money.cnn.com/2009/05/18/real_estate/tax_credit_as_downpayment/index.htm?postversion=2009051912
I must caution that the execution of this is quite complicated and it may take some time before it becomes a reality. By late this week, there were already comments coming out of Washington that this may have been released a bit prematurely, and there is no guarantee that it will be successfully implemented. HUD would need to authorize lenders, non-profits and certain agencies to provide a bridge loan which would then be reimbursed at the time of tax refund. These players are not yet identified. Again, an encouraging and useful tool, but the execution and timing of it have yet to be fully outlined. Watch for more to come.
Most of the news lately has been about the brisk pace of sales at the entry level, where multiple offers are becoming the norm. The median price, although increasing slightly in April over March in the Bay Area, had previously been falling due to the heavy activity in foreclosures at the low end. That said, I thought it important to contrast this with what I’m seeing day to day at the branch office level at the other end of the market. Here is an incomplete list of some of our Coldwell Banker Bay Area closings just this past week:
$7+ Million – Atherton
$5+ Million – Portola Valley
$4.8 Million – San Francisco
$3.2 Million – Santa Rosa
$3 Million – Hillsborough
$2.9 Million - San Francisco
$2.9 Million - Belvedere
$2.6 Million – Los Altos
$2.2 Million - Menlo Park
$2 Million - Los Altos
$2 Million – Monterey
Many more in the $1 to $2 Million range
You won’t likely be reading about this activity in the Chron or the Mercury News – not because I’m not telling reporters about it in recent interviews, but because their focus is elsewhere. I feel everyone should know that besides these recent closings, nearly every office is reporting ratified offers and new Pending Sales in the higher end the past week or so – which is not what we were seeing a few months ago. You won’t hear me calling this a trend (yet) – but it sure is nice to see strong activity and confidence in the high end.
And with that update in tow, let’s take a look at this week in real estate:
East Bay—Berkeley shares that the market is still fast and furious at the lower price points with as many as 15 offers on some properties. Lenders and sellers are choosing all cash buyers, even if their offer is not the highest. There is some concern that these all cash bargains, usually from investors, are artificially driving down neighborhood value, since the fact that there were ready, willing and able buyers who would have offered more is not taken into account. Buyers are also asking what number to put into their offers for loan/appraisal time. Good question. Some Agents are using the number of days given to them by the buyers' loan officer, others advising to the check the "until funded" box in the contract. Castro Valley reports The Today show this week featured the Top 5 recovering cities for the country as related to the housing market. SF Bay Area was featured as number 5. It seems to correlate with the market trends that we have been experiencing lately. Short sales remain the market wildcard. In researching a property we recently wrote an offer for, we found that there was a $200,000 spread between the offer prices between two pending deals on the same street, one was REO and the other short sale. Daily operations remain busy. Oakland reports the market is really active in all price ranges. It has been steady now for all of April and now May. I think our spring market has arrived. Most of the multiple offer scenarios are two offers but occasionally one generates a large number and those are usually under-priced homes. Appraisal issues are now cropping up in escrows and they are taking much longer to close. Negotiations are more protracted. Short sales are active in every price range. Even some of the foreclosures coming on the market now seem to be in better Oakland neighborhoods. Orinda reports open homes are heavily attended and multiple offers are increasing. Sales in the luxury market are on the rise.
Monterey County— Slow but steady continues to be the pace here on the Monterey Peninsula, though the market is quick moving just east of us in the under $400,000 REO market. Many properties over $1.5 million continue to be listed; in fact, there are 283 such properties now listed on Monterey Peninsula, from $1.5 to $35 million; yet only 34 such properties have sold since beginning of year, from $1.5-$7.8 million. It's definitely a buyer's market in the higher price ranges. We did close $1.6 and $1.9 million properties last week, along with 13 others at $1 million and under.
North Bay— The Greenbrae office mentions that a flurry of new listings is looking to extend the Spring market well into Summer. Lots of activity in Central Marin in the $1M-1.1M price range. San Rafael tells us that currently there are 174 active homes & 58 condos on the market in San Rafael with 78 homes & 45 condos pending. In Novato there are 148 active homes and 58 condos which is lower than last year at this time. There are 113 homes and 48 condos pending. In Southern Marin the general feeling is that sales are picking up and buyers are getting more serious. Sebastopol states that Buyers are clamoring for low end inventory. 10+ offers are the norm under 300k. Lots of nosey neighbors at open houses have also been reported.
Peninsula— Things are definitely heating up as the Burlingame office hears more stories of multiple offers & see that the inventory is declining in most areas. Open house attendance is steady. In the Menlo Park area, a couple of higher end sales again which is encouraging. Higher end (over 3.5mil) is beginning to see some movement but higher end inventory levels give buyers a lot of power. Open houses were not as active, most likely due to the heat. Activity seems to be picking up. One Atherton listing was sold list price of $7,995,000. A couple of other high end sales last week both in Menlo & Atherton. For the Palo Alto offices the last seven to ten days has been very busy with multiple offers with prices exceeding upwards of 8-10% over list price on homes from $800k to $3M. I don't believe it's a trend, bit it is certainly very busy. We have had high-end sales & closings within ten days in Atherton at $7+M multiple offers @ $2M, multiple offers @ $3M. As many as five to 13 offers per property.
San Francisco—The Van Ness office tells us the market above 1.5 million continues at a remarkable pace – 8 for this week! For the Market St. office, lots of offers are being written this week, some have ratified, some are still being negotiated, & some were lost out on in multiple offers. Agents sense that the mood of the buyer out now is very positive & very motivated. A Previews property listed at 3.4 million was sold in the first 7 days on the market. Our Lombard office reports that solo offers this week dominated by multiple counter-offers, a number of all cash deals, and some quick deals right on the heels of a price reduction. Again, under $700k a hotter market. As for the Lakeside office, they have stated that the desired impact of the stimulus package seems to be happening. Homes under 600,000 are highly sought after by multiple parties while the higher end properties are still sitting on the market a bit longer & then negotiated down.
Santa Cruz County—The local market continues to plug along; Agents are busy writing offers, trying to get short sales accepted/approved, in general working harder than they ever have. It seems some of the uncertainty is going away and consumer confidence with real estate is on the rise. People are realizing that the window of opportunity is closing, with a lack of inventory, very competitive interest rates and great prices.
Silicon Valley—Our San Jose Almaden office reports that 11 of 13 sales were distressed this week. Currently Santa Clara Count is experiencing over 50% of its inventory pending. Of course it is all the lowest end of the marketplace. Blossom Valley is above 50%, Almaden has climbed to 30% from 12% in just two short months. One REO last received 25 offers and went 25% above asking price. San Jose Main reports a great week for sales and activity. Excellent open house traffic in all price ranges. Buyer motivation is heating up. Low to mid priced homes seem to be getting the most activity. The San Jose Willow Glen office reported we have slowed up a bit and it may be due to graduations and a holiday weekend. Though floor calls and open houses keep us quite busy.
South County—We have 187 active San Benito County single family listings. This week we had 15 closed single family transactions, 10 of which were REOs. We had 20 new active listings this week for Hollister. REO listings have picked up a bit this week. Open house activity is not very good probably due to heat this past weekend. Short sale activity is still strong. In Morgan Hill, the market has not changed from last week. Open houses are well attended, inventory of well priced (entry level) homes is decreasing while demand remains high. Agents are busy writing purchase contracts, but multiple offers are very common and prices are being bided upward. Homes that are selling beyond the asking price (due to multiple offers) are, however, facing appraisal issues.
As we head into this long three day weekend I’d like to wish everyone a very happy and safe Memorial Day weekend with family and friends. It's cold in the City and we’re trying to find the sun, but hopefully many of you will enjoy BBQs, sunshine, maybe a little swimming and (hopefully) a home sale or two.
Until next week,
Make it a great one,
Rick
Rick Turley
President
Coldwell Banker Residential Brokerage San Francisco Bay Area
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
For months I’ve been sharing that this is one of the best times to purchase a home in decades. This week the National Association of Realtors underscored that fact –stating that nationwide housing affordability jumped 10 percentage points during the first quarter of 2009 to its highest level since the series began 18 years ago, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI). The HOI showed that 72.5% of all new and existing US homes sold in the first quarter of 2009 were affordable to families earning the national median income of $64,000, up from 62.4% during the previous quarter and up from 53.8% during the first quarter of 2008.
Locally, the story is much more dramatic. In the San Francisco-Peninsula area, 32% of all new and existing homes sold in the first quarter of 2009 were considered affordable to families earning the area’s median income of $96,800. That’s up 60% from the previous quarter and up an incredible 146% from a year ago, when the index was a paltry 13%, one of the lowest affordability ratios in the United States.
Follow the link below to get the historical charts and details on North Bay, East Bay, Silicon Valley, and Santa Cruz, as well as many other Metros in the US.
.
http://www.nahb.org/page.aspx/category/sectionID=135
Below you’ll find a few more news stories of interest from the week:
http://rismedia.com/2009-05-20/buyer-interest-in-foreclosures-spikes-says-survey/
http://www.nytimes.com/aponline/2009/05/19/us/politics/AP-US-Economy.html?_r=2&scp=17&sq=housing&st=nyt
http://rismedia.com/2009-05-18/distressed-properties-and-first-time-home-buyers-the-recipe-for-real-estate-recovery/
Many of you have asked me questions about the potential changes in the $8,000 first time buyer tax credit (http://www.realtor.org/RMODaily.nsf/pages/News2009051202?OpenDocument). Essentially the U.S. Department of Housing and Urban development announced on May 12th that the Federal Housing Administration would permit its lenders to allow home buyers to use the $8,000 first-time homebuyer tax credit as a down payment. FHA's approved lenders would be permitted to "monetize" the tax credit through short-term bridge loans. This would allow eligible buyers to access the funds immediately at the closing table. Here is a CNN Money article which explains some of the details: http://money.cnn.com/2009/05/18/real_estate/tax_credit_as_downpayment/index.htm?postversion=2009051912
I must caution that the execution of this is quite complicated and it may take some time before it becomes a reality. By late this week, there were already comments coming out of Washington that this may have been released a bit prematurely, and there is no guarantee that it will be successfully implemented. HUD would need to authorize lenders, non-profits and certain agencies to provide a bridge loan which would then be reimbursed at the time of tax refund. These players are not yet identified. Again, an encouraging and useful tool, but the execution and timing of it have yet to be fully outlined. Watch for more to come.
Most of the news lately has been about the brisk pace of sales at the entry level, where multiple offers are becoming the norm. The median price, although increasing slightly in April over March in the Bay Area, had previously been falling due to the heavy activity in foreclosures at the low end. That said, I thought it important to contrast this with what I’m seeing day to day at the branch office level at the other end of the market. Here is an incomplete list of some of our Coldwell Banker Bay Area closings just this past week:
$7+ Million – Atherton
$5+ Million – Portola Valley
$4.8 Million – San Francisco
$3.2 Million – Santa Rosa
$3 Million – Hillsborough
$2.9 Million - San Francisco
$2.9 Million - Belvedere
$2.6 Million – Los Altos
$2.2 Million - Menlo Park
$2 Million - Los Altos
$2 Million – Monterey
Many more in the $1 to $2 Million range
You won’t likely be reading about this activity in the Chron or the Mercury News – not because I’m not telling reporters about it in recent interviews, but because their focus is elsewhere. I feel everyone should know that besides these recent closings, nearly every office is reporting ratified offers and new Pending Sales in the higher end the past week or so – which is not what we were seeing a few months ago. You won’t hear me calling this a trend (yet) – but it sure is nice to see strong activity and confidence in the high end.
And with that update in tow, let’s take a look at this week in real estate:
East Bay—Berkeley shares that the market is still fast and furious at the lower price points with as many as 15 offers on some properties. Lenders and sellers are choosing all cash buyers, even if their offer is not the highest. There is some concern that these all cash bargains, usually from investors, are artificially driving down neighborhood value, since the fact that there were ready, willing and able buyers who would have offered more is not taken into account. Buyers are also asking what number to put into their offers for loan/appraisal time. Good question. Some Agents are using the number of days given to them by the buyers' loan officer, others advising to the check the "until funded" box in the contract. Castro Valley reports The Today show this week featured the Top 5 recovering cities for the country as related to the housing market. SF Bay Area was featured as number 5. It seems to correlate with the market trends that we have been experiencing lately. Short sales remain the market wildcard. In researching a property we recently wrote an offer for, we found that there was a $200,000 spread between the offer prices between two pending deals on the same street, one was REO and the other short sale. Daily operations remain busy. Oakland reports the market is really active in all price ranges. It has been steady now for all of April and now May. I think our spring market has arrived. Most of the multiple offer scenarios are two offers but occasionally one generates a large number and those are usually under-priced homes. Appraisal issues are now cropping up in escrows and they are taking much longer to close. Negotiations are more protracted. Short sales are active in every price range. Even some of the foreclosures coming on the market now seem to be in better Oakland neighborhoods. Orinda reports open homes are heavily attended and multiple offers are increasing. Sales in the luxury market are on the rise.
Monterey County— Slow but steady continues to be the pace here on the Monterey Peninsula, though the market is quick moving just east of us in the under $400,000 REO market. Many properties over $1.5 million continue to be listed; in fact, there are 283 such properties now listed on Monterey Peninsula, from $1.5 to $35 million; yet only 34 such properties have sold since beginning of year, from $1.5-$7.8 million. It's definitely a buyer's market in the higher price ranges. We did close $1.6 and $1.9 million properties last week, along with 13 others at $1 million and under.
North Bay— The Greenbrae office mentions that a flurry of new listings is looking to extend the Spring market well into Summer. Lots of activity in Central Marin in the $1M-1.1M price range. San Rafael tells us that currently there are 174 active homes & 58 condos on the market in San Rafael with 78 homes & 45 condos pending. In Novato there are 148 active homes and 58 condos which is lower than last year at this time. There are 113 homes and 48 condos pending. In Southern Marin the general feeling is that sales are picking up and buyers are getting more serious. Sebastopol states that Buyers are clamoring for low end inventory. 10+ offers are the norm under 300k. Lots of nosey neighbors at open houses have also been reported.
Peninsula— Things are definitely heating up as the Burlingame office hears more stories of multiple offers & see that the inventory is declining in most areas. Open house attendance is steady. In the Menlo Park area, a couple of higher end sales again which is encouraging. Higher end (over 3.5mil) is beginning to see some movement but higher end inventory levels give buyers a lot of power. Open houses were not as active, most likely due to the heat. Activity seems to be picking up. One Atherton listing was sold list price of $7,995,000. A couple of other high end sales last week both in Menlo & Atherton. For the Palo Alto offices the last seven to ten days has been very busy with multiple offers with prices exceeding upwards of 8-10% over list price on homes from $800k to $3M. I don't believe it's a trend, bit it is certainly very busy. We have had high-end sales & closings within ten days in Atherton at $7+M multiple offers @ $2M, multiple offers @ $3M. As many as five to 13 offers per property.
San Francisco—The Van Ness office tells us the market above 1.5 million continues at a remarkable pace – 8 for this week! For the Market St. office, lots of offers are being written this week, some have ratified, some are still being negotiated, & some were lost out on in multiple offers. Agents sense that the mood of the buyer out now is very positive & very motivated. A Previews property listed at 3.4 million was sold in the first 7 days on the market. Our Lombard office reports that solo offers this week dominated by multiple counter-offers, a number of all cash deals, and some quick deals right on the heels of a price reduction. Again, under $700k a hotter market. As for the Lakeside office, they have stated that the desired impact of the stimulus package seems to be happening. Homes under 600,000 are highly sought after by multiple parties while the higher end properties are still sitting on the market a bit longer & then negotiated down.
Santa Cruz County—The local market continues to plug along; Agents are busy writing offers, trying to get short sales accepted/approved, in general working harder than they ever have. It seems some of the uncertainty is going away and consumer confidence with real estate is on the rise. People are realizing that the window of opportunity is closing, with a lack of inventory, very competitive interest rates and great prices.
Silicon Valley—Our San Jose Almaden office reports that 11 of 13 sales were distressed this week. Currently Santa Clara Count is experiencing over 50% of its inventory pending. Of course it is all the lowest end of the marketplace. Blossom Valley is above 50%, Almaden has climbed to 30% from 12% in just two short months. One REO last received 25 offers and went 25% above asking price. San Jose Main reports a great week for sales and activity. Excellent open house traffic in all price ranges. Buyer motivation is heating up. Low to mid priced homes seem to be getting the most activity. The San Jose Willow Glen office reported we have slowed up a bit and it may be due to graduations and a holiday weekend. Though floor calls and open houses keep us quite busy.
South County—We have 187 active San Benito County single family listings. This week we had 15 closed single family transactions, 10 of which were REOs. We had 20 new active listings this week for Hollister. REO listings have picked up a bit this week. Open house activity is not very good probably due to heat this past weekend. Short sale activity is still strong. In Morgan Hill, the market has not changed from last week. Open houses are well attended, inventory of well priced (entry level) homes is decreasing while demand remains high. Agents are busy writing purchase contracts, but multiple offers are very common and prices are being bided upward. Homes that are selling beyond the asking price (due to multiple offers) are, however, facing appraisal issues.
As we head into this long three day weekend I’d like to wish everyone a very happy and safe Memorial Day weekend with family and friends. It's cold in the City and we’re trying to find the sun, but hopefully many of you will enjoy BBQs, sunshine, maybe a little swimming and (hopefully) a home sale or two.
Until next week,
Make it a great one,
Rick
Rick Turley
President
Coldwell Banker Residential Brokerage San Francisco Bay Area
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Weekly Market Watch
Recent Housing Stats Are Showing Encouraging Signs for Market
This week I thought I’d share some positive stories that continue to permeate not only our local news but on a national level as well.
The National Association of Realtors® said its Pending Home Sales Index, based on contracts signed in March, rose 3.2% as first-time buyers waded into the market to take advantage of favorable prices and mortgage rates.
A report from the U.S. Commerce Department showed construction spending rose 0.3% in March, the first increase in six months.
The pending home sales report added evidence that sales have reached a bottom. “That's critical because once sales bottom, it's only a matter of time before you work off excess inventories. That's the key to stabilization in the financial system and the economy at large. We're closer to that than people thought just a few months ago.”
-- Michael Darda, chief economist at MKM Partners in Greenwich, Conn., “Sales and Construction Data Lift Hopes for Housing,” by Lucia Mutikani, Reuters, May 4, 2009.
On a national basis, the forces driving real estate right now are increasingly turning positive and encouraging.
Ø Home sales in major markets around the country have shown dramatic gains in the past month.
Ø In Florida, statewide sales jumped by 30% in March over year-earlier levels, and were up 33% over the previous month. Even condo sales were up by 25%.
Ø In California, statewide sales rose 64% in March compared with March 2008. Unsold inventory is now just five months -- that's down from 12 months the previous March.
Ø Median house prices may be bottoming out. The California Association of Realtors® reports the median price of homes sold was up by 2.2% for the past month.”
-- “Real Estate Outlook: Sales Rising in Some Areas,” by Kenneth R. Harney, Realty Times, May 5, 2009.
Also interesting to note:
Ø The current price level of homes seems to be drawing more buyers into the market, according to Jim Gillespie, president and CEO of Coldwell Banker Real Estate. “We are seeing a lot of activity across the nation. Of course we're in the spring market, but we've seen more buyers in the market now than at this same time last year.”
Ø “Home prices are where they should be. Sellers are accepting the current reality and are pricing more realistically," said Robert Abbott, co-owner and VP of a northern New Jersey brokerage. “More people are not only 'kicking the tires' but actually buying right now. We are showing significant activity when it comes to sales. The number of days for a house on the market is going down.”
-- “More Homes Get Multiple Offers; Downturn May be Nearing End,” by Julie Schmit, USA Today, May 6, 2009.
Multiple bids have picked up in recent months in California and other states hit hard by foreclosures and steep price drops, real estate executives say. “If a house is in a good neighborhood, is maintained and is a good value, it'll get multiple offers. One in 10 homes now draw multiple offers, up from one in 30 last fall.”
-- Julie Holt, owner of a title services company in Florida, “Is Now the Time for Some Home Buyers to Make a Deal?,” by Mark Koba, CNBC, April 28, 2009.
And with that news in tow, let’s take a look at this week in real estate:
East Bay—Berkeley reports that buyers are stepping forward to make offers, while others continue to have scary perceptions which keep them from offering. Job security is the biggest worry. Sellers are reluctant to reduce prices. No one knows what Cuomo's new appraisal regulations will mean to the market. It ought to be a big convincer to sellers to keep their list prices reasonable. Banks continue to look for all cash buyers. Danville reports that inventory in San Ramon and Dublin is under two months. We need inventory! Fremont reports this past week seemed to be a bit slower, maybe because of Mother's Day last weekend. The open homes are busy with people who are interested in buying, they just need a little encouragement. Oakland reports interest rates have come down for jumbo loans, so we are picking up listings in the upper end and they are selling. The market is really picking up and we are up over last year. The past week we have a very large percentage of multiple offers, mostly two offers on each property, one had nine in a very low price point. Still seeing appraisal issues that are new based on changing guidelines. Walnut Creek reports the low end of the price range is selling with multiple offers, driving up prices. In the mid range, the well priced, nice looking properties are selling with numerous counters back and forth between buyers/sellers. Upper end is not moving.
Monterey County—It's a quick-moving market to the east of us, Salinas south to Greenfield, and also Seaside, in our area, where the prices on the REOs combined with the low interest rates are motivating first-time buyers and, increasingly, local investors. Market is still sluggish in areas more our marketplace, like Carmel and Pebble Beach, where we are seeing increasing numbers of properties coming on as short sales or likely to be short sales by the time a buyer steps forward with an offer.
North Bay—Petaluma reports inventory continues to be light and the majority of the Agents have multiple buyers hovering over a limited number of listings. Most of the properties under $300,000 are getting double digit multiple offers. Santa Rosa reports that its REO specialist says there may be some light at the end of the tunnel as assignments are starting to trickle in. We still have lots of buyers and few properties to show them. Sebastopol notes a lack of new inventory continues to be the challenge. San Rafael reports there is an increase in listing and sales activity in properties that are not distressed (REOs and short sales) in all price points. We listed two properties over a million and have offers in on two properties over $1.5 million in San Rafael and Novato. Greenbrae office says they are seeing multiple offers for well-priced, well-presented homes in Greenbrae, Larkspur, and Corte Madera. This is in sharp contrast to just a few months ago when fears of the country’s financial crisis seemed overwhelming. Things seem to be easing up now as Buyers with good credit and a job are finding it not so difficult to get a loan –and at record low interest rates! The Southern Marin offices report the first week of April saw increases across the board in our Southern Marin offices. We saw $8 million worth of new sales and close to $5 million of closed escrows, by far the most we have seen all year. Many reports of multiple offers and even the $2 to $3 million is picking up in So. Marin.
Peninsula—The Burlingame office reported that Mother’s Day didn't slow down the open homes that were held open. There were an average of 20-25 groups through in most reports. Buyers were asking when offers were being presented and we haven't heard that in awhile. The Half Moon Bay office reports seeing more listing Agents/sellers increasing the sale side commission to attract more showings. Good attendance at open houses. The Menlo Park El Camino office reports a great week—sales from $9.8 million to $185,000 and a lot of them! Everyone seems a bit more positive. The price base is rising; high end sellers are realizing that their prices are just too high for the current marketplace and finally are seeing the light. We had one sale listed at $3.4 mil that had turned down offers of $4 million a few months ago—same story across the board. Redwood City reports lots of activity on open houses even on Mother's Day; 40 to 50 groups at a new San Carlos listings. We're seeing multiple offers on the low end REOs-the $800,000 - $1m range is attracting more interest but first must be perceived as a great value. Woodside reports we are beginning to see offers being made on our higher end properties; not coming together just yet but we have hop. Two that are currently in play have come down from their high listing price about 35%
San Francisco—The Lakeside office reports that the entry level market is hot right now; anything under $600,000. The Lombard office reports that after a fast start to May, we had a slow week. Possibly due to Mother's Day? After a flurry of multiple offers, back this week to multiple counter-offers (up to five and six). Hard negotiations. A fall out and frayed nerves over slow loan processes. Time for listing Agent and sellers to be a little more patient and accommodating. The Noriega office reports in the affordable price range $400,000-600,000, buyers are definitely off the fence, but good inventory in the price range extremely low and multiple offers are very common. The Van Ness office reports continued increase in sales activity, and is seeing activity at all price points. This week the office reported 36 ratified offers - Wow!
Santa Cruz County—Steady as we go. We are cautiously optimistic about the market activity. Like other areas with a high REO number, that inventory has been drying up thus creating multiple offers on those properties. There remains an expectation that more are coming, we have yet to see any new bank owned properties to list. Buyers are realizing that time is of the essence in terms of purchasing and many are taking advantage of the tax credit for first time buyers. Along with the lowest interest rates ever, activity is steady in the lower end also. Financing, appraisals, appraisal reviews, longer loan times in general, are the norm and creating stress on most of the transactions. Managing the client expectations whether it is a buyer or seller (or the other agent) from beginning to end is crucial.
Silicon Valley—Our San Jose Almaden office reports all 10 sales this last week were distressed properties; mostly REOs. Many REO listings are receiving 10-25 offers. Banks are jamming the list prices down in an effort to stimulate activity. And it is working. Those properties are often selling at 20% or more above asking price! The San Jose Willow Glen office reports we are a lot busier. Buyers seem to be a lot more comfortable in taking the step into home buying. Open houses are very busy with a lot of traffic as well. San Jose Main reports listings are slowing and sales increasing. Most multiple offer sales are occurring in the lower price range. Excellent weekend traffic reported at open houses both Saturday and Sunday. Saratoga reports our upper end continues to lag. On a positive note our sales under $1,500,000 were very strong last week. I'm hopeful this is a sign that buyers are comfortable that we've hit the bottom of the market.
South County—The Gilroy office reports open house activity was slow due to Mother's day weekend and the wonderful weather. Agents are now challenged with the lack of inventory. Most new listings are receiving multiple offers and selling over list price. Bank owned properties are still the majority of the market sales. The Hollister office reports active listings are down from last week. Sale pendings are up. The average DOM is 80. The average sales price is $300,000 up from last month. REO inventory is decreasing. Short sale listings are increasing. The Morgan Hill office reports that in South County an interesting phenomenon is occurring. The demand for "entry level" (well priced homes under $300,000) is far exceeding supply. This past month Agents have experienced multiple offers of these types of properties. In most cases these listings are selling over asking price with multiple offers. This is a very encouraging sign that, perhaps, prices are stabilizing.
In short, it seems buyers are finally starting to get the sense that now is a good time to buy and that if they wait, they may loose out on one of the best times in California history to purchase real estate. Now, if we could just get more listings. Do we sound like we are never satisfied? Oh well, what a difference a year makes! It’s an exciting time so let’s make good use of it. I am currently wrapping up meetings in Washington DC as an NAR Director, so next week I’ll write on some of the important legislation being proposed to complete the necessary steps for our housing recovery.
Until next week,
Make it great one,
Rick
Rick Turley
President
Coldwell Banker Residential Brokerage San Francisco Bay Area
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
This week I thought I’d share some positive stories that continue to permeate not only our local news but on a national level as well.
The National Association of Realtors® said its Pending Home Sales Index, based on contracts signed in March, rose 3.2% as first-time buyers waded into the market to take advantage of favorable prices and mortgage rates.
A report from the U.S. Commerce Department showed construction spending rose 0.3% in March, the first increase in six months.
The pending home sales report added evidence that sales have reached a bottom. “That's critical because once sales bottom, it's only a matter of time before you work off excess inventories. That's the key to stabilization in the financial system and the economy at large. We're closer to that than people thought just a few months ago.”
-- Michael Darda, chief economist at MKM Partners in Greenwich, Conn., “Sales and Construction Data Lift Hopes for Housing,” by Lucia Mutikani, Reuters, May 4, 2009.
On a national basis, the forces driving real estate right now are increasingly turning positive and encouraging.
Ø Home sales in major markets around the country have shown dramatic gains in the past month.
Ø In Florida, statewide sales jumped by 30% in March over year-earlier levels, and were up 33% over the previous month. Even condo sales were up by 25%.
Ø In California, statewide sales rose 64% in March compared with March 2008. Unsold inventory is now just five months -- that's down from 12 months the previous March.
Ø Median house prices may be bottoming out. The California Association of Realtors® reports the median price of homes sold was up by 2.2% for the past month.”
-- “Real Estate Outlook: Sales Rising in Some Areas,” by Kenneth R. Harney, Realty Times, May 5, 2009.
Also interesting to note:
Ø The current price level of homes seems to be drawing more buyers into the market, according to Jim Gillespie, president and CEO of Coldwell Banker Real Estate. “We are seeing a lot of activity across the nation. Of course we're in the spring market, but we've seen more buyers in the market now than at this same time last year.”
Ø “Home prices are where they should be. Sellers are accepting the current reality and are pricing more realistically," said Robert Abbott, co-owner and VP of a northern New Jersey brokerage. “More people are not only 'kicking the tires' but actually buying right now. We are showing significant activity when it comes to sales. The number of days for a house on the market is going down.”
-- “More Homes Get Multiple Offers; Downturn May be Nearing End,” by Julie Schmit, USA Today, May 6, 2009.
Multiple bids have picked up in recent months in California and other states hit hard by foreclosures and steep price drops, real estate executives say. “If a house is in a good neighborhood, is maintained and is a good value, it'll get multiple offers. One in 10 homes now draw multiple offers, up from one in 30 last fall.”
-- Julie Holt, owner of a title services company in Florida, “Is Now the Time for Some Home Buyers to Make a Deal?,” by Mark Koba, CNBC, April 28, 2009.
And with that news in tow, let’s take a look at this week in real estate:
East Bay—Berkeley reports that buyers are stepping forward to make offers, while others continue to have scary perceptions which keep them from offering. Job security is the biggest worry. Sellers are reluctant to reduce prices. No one knows what Cuomo's new appraisal regulations will mean to the market. It ought to be a big convincer to sellers to keep their list prices reasonable. Banks continue to look for all cash buyers. Danville reports that inventory in San Ramon and Dublin is under two months. We need inventory! Fremont reports this past week seemed to be a bit slower, maybe because of Mother's Day last weekend. The open homes are busy with people who are interested in buying, they just need a little encouragement. Oakland reports interest rates have come down for jumbo loans, so we are picking up listings in the upper end and they are selling. The market is really picking up and we are up over last year. The past week we have a very large percentage of multiple offers, mostly two offers on each property, one had nine in a very low price point. Still seeing appraisal issues that are new based on changing guidelines. Walnut Creek reports the low end of the price range is selling with multiple offers, driving up prices. In the mid range, the well priced, nice looking properties are selling with numerous counters back and forth between buyers/sellers. Upper end is not moving.
Monterey County—It's a quick-moving market to the east of us, Salinas south to Greenfield, and also Seaside, in our area, where the prices on the REOs combined with the low interest rates are motivating first-time buyers and, increasingly, local investors. Market is still sluggish in areas more our marketplace, like Carmel and Pebble Beach, where we are seeing increasing numbers of properties coming on as short sales or likely to be short sales by the time a buyer steps forward with an offer.
North Bay—Petaluma reports inventory continues to be light and the majority of the Agents have multiple buyers hovering over a limited number of listings. Most of the properties under $300,000 are getting double digit multiple offers. Santa Rosa reports that its REO specialist says there may be some light at the end of the tunnel as assignments are starting to trickle in. We still have lots of buyers and few properties to show them. Sebastopol notes a lack of new inventory continues to be the challenge. San Rafael reports there is an increase in listing and sales activity in properties that are not distressed (REOs and short sales) in all price points. We listed two properties over a million and have offers in on two properties over $1.5 million in San Rafael and Novato. Greenbrae office says they are seeing multiple offers for well-priced, well-presented homes in Greenbrae, Larkspur, and Corte Madera. This is in sharp contrast to just a few months ago when fears of the country’s financial crisis seemed overwhelming. Things seem to be easing up now as Buyers with good credit and a job are finding it not so difficult to get a loan –and at record low interest rates! The Southern Marin offices report the first week of April saw increases across the board in our Southern Marin offices. We saw $8 million worth of new sales and close to $5 million of closed escrows, by far the most we have seen all year. Many reports of multiple offers and even the $2 to $3 million is picking up in So. Marin.
Peninsula—The Burlingame office reported that Mother’s Day didn't slow down the open homes that were held open. There were an average of 20-25 groups through in most reports. Buyers were asking when offers were being presented and we haven't heard that in awhile. The Half Moon Bay office reports seeing more listing Agents/sellers increasing the sale side commission to attract more showings. Good attendance at open houses. The Menlo Park El Camino office reports a great week—sales from $9.8 million to $185,000 and a lot of them! Everyone seems a bit more positive. The price base is rising; high end sellers are realizing that their prices are just too high for the current marketplace and finally are seeing the light. We had one sale listed at $3.4 mil that had turned down offers of $4 million a few months ago—same story across the board. Redwood City reports lots of activity on open houses even on Mother's Day; 40 to 50 groups at a new San Carlos listings. We're seeing multiple offers on the low end REOs-the $800,000 - $1m range is attracting more interest but first must be perceived as a great value. Woodside reports we are beginning to see offers being made on our higher end properties; not coming together just yet but we have hop. Two that are currently in play have come down from their high listing price about 35%
San Francisco—The Lakeside office reports that the entry level market is hot right now; anything under $600,000. The Lombard office reports that after a fast start to May, we had a slow week. Possibly due to Mother's Day? After a flurry of multiple offers, back this week to multiple counter-offers (up to five and six). Hard negotiations. A fall out and frayed nerves over slow loan processes. Time for listing Agent and sellers to be a little more patient and accommodating. The Noriega office reports in the affordable price range $400,000-600,000, buyers are definitely off the fence, but good inventory in the price range extremely low and multiple offers are very common. The Van Ness office reports continued increase in sales activity, and is seeing activity at all price points. This week the office reported 36 ratified offers - Wow!
Santa Cruz County—Steady as we go. We are cautiously optimistic about the market activity. Like other areas with a high REO number, that inventory has been drying up thus creating multiple offers on those properties. There remains an expectation that more are coming, we have yet to see any new bank owned properties to list. Buyers are realizing that time is of the essence in terms of purchasing and many are taking advantage of the tax credit for first time buyers. Along with the lowest interest rates ever, activity is steady in the lower end also. Financing, appraisals, appraisal reviews, longer loan times in general, are the norm and creating stress on most of the transactions. Managing the client expectations whether it is a buyer or seller (or the other agent) from beginning to end is crucial.
Silicon Valley—Our San Jose Almaden office reports all 10 sales this last week were distressed properties; mostly REOs. Many REO listings are receiving 10-25 offers. Banks are jamming the list prices down in an effort to stimulate activity. And it is working. Those properties are often selling at 20% or more above asking price! The San Jose Willow Glen office reports we are a lot busier. Buyers seem to be a lot more comfortable in taking the step into home buying. Open houses are very busy with a lot of traffic as well. San Jose Main reports listings are slowing and sales increasing. Most multiple offer sales are occurring in the lower price range. Excellent weekend traffic reported at open houses both Saturday and Sunday. Saratoga reports our upper end continues to lag. On a positive note our sales under $1,500,000 were very strong last week. I'm hopeful this is a sign that buyers are comfortable that we've hit the bottom of the market.
South County—The Gilroy office reports open house activity was slow due to Mother's day weekend and the wonderful weather. Agents are now challenged with the lack of inventory. Most new listings are receiving multiple offers and selling over list price. Bank owned properties are still the majority of the market sales. The Hollister office reports active listings are down from last week. Sale pendings are up. The average DOM is 80. The average sales price is $300,000 up from last month. REO inventory is decreasing. Short sale listings are increasing. The Morgan Hill office reports that in South County an interesting phenomenon is occurring. The demand for "entry level" (well priced homes under $300,000) is far exceeding supply. This past month Agents have experienced multiple offers of these types of properties. In most cases these listings are selling over asking price with multiple offers. This is a very encouraging sign that, perhaps, prices are stabilizing.
In short, it seems buyers are finally starting to get the sense that now is a good time to buy and that if they wait, they may loose out on one of the best times in California history to purchase real estate. Now, if we could just get more listings. Do we sound like we are never satisfied? Oh well, what a difference a year makes! It’s an exciting time so let’s make good use of it. I am currently wrapping up meetings in Washington DC as an NAR Director, so next week I’ll write on some of the important legislation being proposed to complete the necessary steps for our housing recovery.
Until next week,
Make it great one,
Rick
Rick Turley
President
Coldwell Banker Residential Brokerage San Francisco Bay Area
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Weekly Market Watch
Stress Test Reveals More Work to Be Done By Banks- While Entry Level Local Real Estate Market Heats Up!
This week the results of the long-awaited Stress Test on US banks were released. What the government hoped to accomplish through this Stress Test was to determine how much capital the banking sector currently has, and what level they deem appropriate to withstand the recession. The result was that 10 of the nation’s 19 largest banks will need to raise a total of $74.6 billion in capital. The Stress Test revealed that banks like Goldman Sachs and J.P. Morgan seemed to be better positioned than Citigroup and Bank of America.
At this point, according to Kiplinger, “The stronger banks will actively do what they can to return any money borrowed from the government to get out from under restrictions on dividends and executive compensation. Their ability to sell common stock to the public is far better than their weaker counterparts, who may have to privately sell stock to investors or raise capital with so-called mandatory convertible preferred shares.”
According to industry analysts, it seems that until the banks get back on their feet, credit will continue to be tight. That leaves the Federal Reserve responsible for filling in the gaps with its own programs aimed at jump-starting lending.
On a brighter note, however, the real estate sector of our economy continues to show some positive signs. USA Today reported earlier this week that “More homes for sale are attracting multiple offers as buyers pursue lower-price homes and banks low-ball asking prices to attract competing bids on foreclosures.” It’s exactly what we’ve seen locally, the entry level home buyer market is fueling this recovery. We forecasted this, and now that multiple offers are the norm in the majority of our entry level markets, some frustrated buyers are scratching their heads and wondering what happened to the buyer’s market. We warned that things could turn on a dime, and it seems in many starter home markets, prices are already on the rise.
Here are some links to some interesting news stories from the week:
USA Today: More homes get multiple offers; downturn may be nearing end (http://www.usatoday.com/money/economy/housing/2009-05-05-foreclosure-home-sales_N.htm?loc=interstitialskip)
Business Week: Want to Sell Your Home? Lower Your Price (http://www.businessweek.com/lifestyle/content/may2009/bw2009055_075566.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis)
RISMedia: Relocation.com Survey Shows Consumers Moving Further Due to Economy (http://rismedia.com/2009-05-05/relocationcom-survey-shows-consumers-moving-further-due-to-economy/) – This is a good reminder to consumers on why they should choose an Agent who is affiliated with a large, global real estate company that has the breadth and influence to reach the largest pool of buyers.
NYTimes: Where Home Prices Crashed Early, Signs of a Recovery (http://www.nytimes.com/2009/05/05/business/economy/05turnaround.html?_r=2&hp)
Realty Times: Real Estate Outlook: Sales Rising in Some Areas (http://realtytimes.com/rtpages/20090505_realestateoutlook.htm)
Now, let’s take a look at this week in real estate:
East Bay—Castro Valley reports short sales continue to dominate the market. Listing inventory is so limited that properties are going pending as soon as they hit the market. One property went pending one day after listing. Many of our Agents are frustrated because they set appointments with buyers to view properties, but the properties are already in escrow. REOs are starting to reappear in the market. Fremont reports it seems that the market is starting to pick up and buyers are feeling more confident in the economy—they are starting to move forward, not just looking! Livermore notes the major part of our market are properties priced below $500,000. We continue to see multiple offers on almost all properties in this price range with the majority of the sales being REOs and short sales. Something noteworthy is that they had two sales in the office this past week in $800,000 range which has not happened in several months.
Monterey County—The market continues on with slowness in the higher prices ranges and multiple offers on the REOs in Seaside, Marina, Las Palmas in Salinas and South County, where you can now buy a 5-bedroom, 3-bath home for around $265,000. Seaside is the "hot" spot and has had 86 closings this year, with only 43 active properties at this point (10 of those in escrow), while Pebble Beach has had only 18 closings this year, with 106 active listings and only one of those pending.
North Bay—Greenbrae reports that Spring seems to have sprung in the million price range. We are seeing increased activity in all Marin cities. San Rafael notes that there is still a huge turn out of buyers at open houses in San Rafael and Novato at the lower end of the market. Southern Marin reports a great week as well. Agents were involved in several multiple offer presentations and won! The market is definitely picking up in Southern Marin. Santa Rosa reports that they are starting to really feel the effects of the shortage of REO inventory. Sales of non distressed properties have picked up. Short sale escrows have increased but no apparent increase in the percentage of short sales closing. The Sebastopol office reports multiple offers in all price ranges. A dearth of new REO properties is pushing short sale offers. We’re seeing that 10-15 offers are not uncommon.
Peninsula—The Burlingame office reports that the rainy weekend didn't dampen the open house attendance. Burlingame, Hillsborough and San Mateo opens were well attended. The Agents are reporting that many buyers are feeling that we are at the bottom and now is the time to buy. There is such a need for quality inventory in the $800,000 range as this is where so many of our clients are looking. Menlo Park Santa Cruz Avenue reports that open houses were packed over the weekend in all price ranges. There seems to be a ground swell of activity with Agents writing offers that will hopefully translate to transactions next week. Palo Alto reports some optimism and some movement in the area. As inventory builds, buyers have more selections. San Mateo had a good analogy about the market: Buyers seem to be “on your mark, get set…there just isn’t enough ‘go” yet but open houses are well attended.” It’s the indecision on the part of buyers that we’re still seeing in this market.
San Francisco—The Lombard office is reporting good traffic and sales activity in the $500,000-750,000 price range. They saw more multiple offers, winning and losing, this week than any time in the last year. But buyers above $1.5 million continue their reluctance to make a move. This will all come in due time. The Market Street office reports that this is the third week in a row that a property was brought on the market and sold with multiple offers in less than one week. The list price was $749,000. The other property that was in multiples had been on the market for 90 days when two offers came in on the same day. More offers are being written and open houses are well attended. The Noriega office reports two out of the three multiples were REOs, the one that was not is an Outer Sunset home listed for $539,000, original fixer, received 11 offers, 8 out of 11 were over asking. We’re expecting a flood of REO listings coming, starting mid-late June this year. Their BPO activities were way down in Feb/March, but it really picked up in April. If you have a “value minded” buyer on the sideline, get them ready, get them pre-approved and get your Agents ready to sell these REOs. The “sale" is a limited time offer only.
Santa Cruz County—With some positive news abounding in the news and some positive indicators in the market, it seems consumer confidence is beginning to come back (we are very cautiously optimistic). We are expecting another wave of REOs to come through within the next couple of months. The inventory in South County has for the most part dried up and there are multiple (multiple) offers on what is left of the REO properties. We are seeing prices increase in South County from three months ago. Overall throughout Santa Cruz County, inventory levels are way down and we have experienced multiple offers on many properties below $800,000.
Silicon Valley—San Jose Almaden reports distressed sales continue to dominate our market. 11 or the 13 sales are distressed. Almaden which had been slow is beginning to pick up nicely. Three properties sold in Almaden within two weeks of being listed last week from this office. San Jose Main reports activity and sales continue to be brisk in the price range of $550,000 down. Many multiple offers on $250,000 to $550,000 homes and condos. Sales are up but listings continue to lag. Saratoga notes we're still experiencing a slow upper end. We're seeing some multiple offers on REOs and well priced lower end properties.
South County—The Hollister office is reporting that last week in San Benito County we had 198 active single family listings and 140 pending transactions. This week we have 183 active single family listings and 200 pending transactions. The month of April reports 52 closed single family transactions for San Benito County. Multiple offers are still being seen on most REO properties. Last month the Morgan Hill office had incredible sales activity. Agents were very busy writing offers and getting them accepted. Response time for short sale and REO offers is much more acceptable. Interest rates continue to be attractive. Our goal is to keep up the momentum.
What do we do with this information? The responsible thing is to make sure everyone hears it. It’s one thing for me to talk about a recovering market but it’s another when even the most pessimistic analysts are doing the same. The stories above share the real story. All of our offices are reporting similar stories and as I visit our offices and talk with our Agents, I’m hearing the same scenario: the market is heating up. The window of opportunity has been open and it has been inviting buyers in for months. With the speed that buyers are responding today, it won’t be open long. I can assure you there will be people years from now who will say “Why didn’t I buy more real estate in 2009?”
Until next week-
Rick
Rick Turley
President
Coldwell Banker Residential Brokerage San Francisco Bay Area
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
This week the results of the long-awaited Stress Test on US banks were released. What the government hoped to accomplish through this Stress Test was to determine how much capital the banking sector currently has, and what level they deem appropriate to withstand the recession. The result was that 10 of the nation’s 19 largest banks will need to raise a total of $74.6 billion in capital. The Stress Test revealed that banks like Goldman Sachs and J.P. Morgan seemed to be better positioned than Citigroup and Bank of America.
At this point, according to Kiplinger, “The stronger banks will actively do what they can to return any money borrowed from the government to get out from under restrictions on dividends and executive compensation. Their ability to sell common stock to the public is far better than their weaker counterparts, who may have to privately sell stock to investors or raise capital with so-called mandatory convertible preferred shares.”
According to industry analysts, it seems that until the banks get back on their feet, credit will continue to be tight. That leaves the Federal Reserve responsible for filling in the gaps with its own programs aimed at jump-starting lending.
On a brighter note, however, the real estate sector of our economy continues to show some positive signs. USA Today reported earlier this week that “More homes for sale are attracting multiple offers as buyers pursue lower-price homes and banks low-ball asking prices to attract competing bids on foreclosures.” It’s exactly what we’ve seen locally, the entry level home buyer market is fueling this recovery. We forecasted this, and now that multiple offers are the norm in the majority of our entry level markets, some frustrated buyers are scratching their heads and wondering what happened to the buyer’s market. We warned that things could turn on a dime, and it seems in many starter home markets, prices are already on the rise.
Here are some links to some interesting news stories from the week:
USA Today: More homes get multiple offers; downturn may be nearing end (http://www.usatoday.com/money/economy/housing/2009-05-05-foreclosure-home-sales_N.htm?loc=interstitialskip)
Business Week: Want to Sell Your Home? Lower Your Price (http://www.businessweek.com/lifestyle/content/may2009/bw2009055_075566.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis)
RISMedia: Relocation.com Survey Shows Consumers Moving Further Due to Economy (http://rismedia.com/2009-05-05/relocationcom-survey-shows-consumers-moving-further-due-to-economy/) – This is a good reminder to consumers on why they should choose an Agent who is affiliated with a large, global real estate company that has the breadth and influence to reach the largest pool of buyers.
NYTimes: Where Home Prices Crashed Early, Signs of a Recovery (http://www.nytimes.com/2009/05/05/business/economy/05turnaround.html?_r=2&hp)
Realty Times: Real Estate Outlook: Sales Rising in Some Areas (http://realtytimes.com/rtpages/20090505_realestateoutlook.htm)
Now, let’s take a look at this week in real estate:
East Bay—Castro Valley reports short sales continue to dominate the market. Listing inventory is so limited that properties are going pending as soon as they hit the market. One property went pending one day after listing. Many of our Agents are frustrated because they set appointments with buyers to view properties, but the properties are already in escrow. REOs are starting to reappear in the market. Fremont reports it seems that the market is starting to pick up and buyers are feeling more confident in the economy—they are starting to move forward, not just looking! Livermore notes the major part of our market are properties priced below $500,000. We continue to see multiple offers on almost all properties in this price range with the majority of the sales being REOs and short sales. Something noteworthy is that they had two sales in the office this past week in $800,000 range which has not happened in several months.
Monterey County—The market continues on with slowness in the higher prices ranges and multiple offers on the REOs in Seaside, Marina, Las Palmas in Salinas and South County, where you can now buy a 5-bedroom, 3-bath home for around $265,000. Seaside is the "hot" spot and has had 86 closings this year, with only 43 active properties at this point (10 of those in escrow), while Pebble Beach has had only 18 closings this year, with 106 active listings and only one of those pending.
North Bay—Greenbrae reports that Spring seems to have sprung in the million price range. We are seeing increased activity in all Marin cities. San Rafael notes that there is still a huge turn out of buyers at open houses in San Rafael and Novato at the lower end of the market. Southern Marin reports a great week as well. Agents were involved in several multiple offer presentations and won! The market is definitely picking up in Southern Marin. Santa Rosa reports that they are starting to really feel the effects of the shortage of REO inventory. Sales of non distressed properties have picked up. Short sale escrows have increased but no apparent increase in the percentage of short sales closing. The Sebastopol office reports multiple offers in all price ranges. A dearth of new REO properties is pushing short sale offers. We’re seeing that 10-15 offers are not uncommon.
Peninsula—The Burlingame office reports that the rainy weekend didn't dampen the open house attendance. Burlingame, Hillsborough and San Mateo opens were well attended. The Agents are reporting that many buyers are feeling that we are at the bottom and now is the time to buy. There is such a need for quality inventory in the $800,000 range as this is where so many of our clients are looking. Menlo Park Santa Cruz Avenue reports that open houses were packed over the weekend in all price ranges. There seems to be a ground swell of activity with Agents writing offers that will hopefully translate to transactions next week. Palo Alto reports some optimism and some movement in the area. As inventory builds, buyers have more selections. San Mateo had a good analogy about the market: Buyers seem to be “on your mark, get set…there just isn’t enough ‘go” yet but open houses are well attended.” It’s the indecision on the part of buyers that we’re still seeing in this market.
San Francisco—The Lombard office is reporting good traffic and sales activity in the $500,000-750,000 price range. They saw more multiple offers, winning and losing, this week than any time in the last year. But buyers above $1.5 million continue their reluctance to make a move. This will all come in due time. The Market Street office reports that this is the third week in a row that a property was brought on the market and sold with multiple offers in less than one week. The list price was $749,000. The other property that was in multiples had been on the market for 90 days when two offers came in on the same day. More offers are being written and open houses are well attended. The Noriega office reports two out of the three multiples were REOs, the one that was not is an Outer Sunset home listed for $539,000, original fixer, received 11 offers, 8 out of 11 were over asking. We’re expecting a flood of REO listings coming, starting mid-late June this year. Their BPO activities were way down in Feb/March, but it really picked up in April. If you have a “value minded” buyer on the sideline, get them ready, get them pre-approved and get your Agents ready to sell these REOs. The “sale" is a limited time offer only.
Santa Cruz County—With some positive news abounding in the news and some positive indicators in the market, it seems consumer confidence is beginning to come back (we are very cautiously optimistic). We are expecting another wave of REOs to come through within the next couple of months. The inventory in South County has for the most part dried up and there are multiple (multiple) offers on what is left of the REO properties. We are seeing prices increase in South County from three months ago. Overall throughout Santa Cruz County, inventory levels are way down and we have experienced multiple offers on many properties below $800,000.
Silicon Valley—San Jose Almaden reports distressed sales continue to dominate our market. 11 or the 13 sales are distressed. Almaden which had been slow is beginning to pick up nicely. Three properties sold in Almaden within two weeks of being listed last week from this office. San Jose Main reports activity and sales continue to be brisk in the price range of $550,000 down. Many multiple offers on $250,000 to $550,000 homes and condos. Sales are up but listings continue to lag. Saratoga notes we're still experiencing a slow upper end. We're seeing some multiple offers on REOs and well priced lower end properties.
South County—The Hollister office is reporting that last week in San Benito County we had 198 active single family listings and 140 pending transactions. This week we have 183 active single family listings and 200 pending transactions. The month of April reports 52 closed single family transactions for San Benito County. Multiple offers are still being seen on most REO properties. Last month the Morgan Hill office had incredible sales activity. Agents were very busy writing offers and getting them accepted. Response time for short sale and REO offers is much more acceptable. Interest rates continue to be attractive. Our goal is to keep up the momentum.
What do we do with this information? The responsible thing is to make sure everyone hears it. It’s one thing for me to talk about a recovering market but it’s another when even the most pessimistic analysts are doing the same. The stories above share the real story. All of our offices are reporting similar stories and as I visit our offices and talk with our Agents, I’m hearing the same scenario: the market is heating up. The window of opportunity has been open and it has been inviting buyers in for months. With the speed that buyers are responding today, it won’t be open long. I can assure you there will be people years from now who will say “Why didn’t I buy more real estate in 2009?”
Until next week-
Rick
Rick Turley
President
Coldwell Banker Residential Brokerage San Francisco Bay Area
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Weekly Market Watch
Favorable signs in many markets
Last week I reported on positive indicators in the first-time homebuyer market. New mortgage applications for home purchases and refinances were up 77 percent from the same week in April 2008. Mortgage rates continue to average well below 5 percent – 4.7 percent last week on average for 30-year fixed rate loans and 4.5 percent for 15 year loans. Rates like these are a major factor pushing applications. Nearly 600,000 home buyers have already claimed either the $7,500 tax credit from last year or the $8,000 credit for this year, according to IRS data cited by the National Association of Home Builders.
Statewide, CAR reported improvement in both sales numbers and median price. March existing home sales were up 64% from prior year, and median price had the first month-over-month increase since August of 2007. California’s inventory of unsold homes also fell in March to five months, down from 12.2 months in March 2008, making March ‘09 a three year low for existing inventory.
Locally, I want share what’s going on in the East Bay (Alameda and Contra Costa Counties) which has been one of the markets hardest hit by foreclosures and price declines. We are starting to see some real positive news in this market. Specifically (as displayed in the graph below), when comparing accepted offers to new listings, we are currently at 112% which is a 69% increase year over year and an 86% increase from this time two years ago. The graph tells the story:
The positive trend in the East Bay numbers above are impacted greatly by the brisk sale of distressed properties; REO properties are selling at a faster pace than new bank-owned properties are getting released. Good news from our local branch offices in the East Bay is that entry level priced homes which are not bank-owned and not distress sales are also selling faster than new listings are being brought to the market. This is also what we are seeing in our Sonoma County offices and our Santa Clara County offices - the entry level is really moving.
With regards to the luxury market, we’ve had a flurry of high end sales in our San Francisco offices, so I took a look at some recent luxury market statistics. As per the San Francisco MLS, April 2009 was the third consecutive month of increased sales activity over $2 million. With 29 San Francisco $2M+ pending sales in the month, April’s high end activity was more than twice that of March 2009. The same trend occurred in San Mateo and Santa Clara Counties in the $2M+ market, although not as dramatic month-over-month increases.
The note of caution here is that while the numbers of sales are increasing in the high end – we still have a 21 month’s supply of inventory in San Mateo and Santa Clara Counties in the $2M+ market, which is nearly triple the 7.6 month’s supply we had in April ‘08. And San Francisco currently has 19 month’s supply, versus 5.5 a year ago; also nearly triple the MSI for the $2M+ market. Agents in all three counties say that it is the really competitively priced new listings, and the dramatic price reductions of older listings which are causing our recent sales activity in the high end, with a lot of other inventory just sitting.
Here is what our offices reported this week:
East Bay—Berkeley reports they had a slow week two weeks ago and things really picked up this last week. Lots of visitors to open houses, 20 - 45 groups at many of our properties. Getting some good price reductions on some listings that have been out there for awhile. Agents are beginning to have that pricing conversation early on with sellers to not get caught chasing the market downward. Castro Valley reports that short sales continue to dominate the market. The $300K price range buyers have incredible competition. Listing inventory is the lowest that it has been in years. New listings in the market this week are 47 SFR vs. the 200 or so we have seen one year ago. Multiple offers are starting to surface in the $500,000 market. Danville reports the spring market is gaining steam. Inventory in some of our market area is less than two months and the number of new pending sales in the past week shot up 50%. In the Tri-Valley in the past three weeks we have seen a very positive shift in the market. Overall listing inventory declined 6.25% in Livermore; declined 4.8% in Pleasanton; and declined 9.2% in Dublin. Walnut Creek is begging for more inventory.
Monterey County—The market continues on at a steady pace as far as new listings and escrows. There seem to be more buyers on the prowl for good buys these days. Some are voicing the opinion that we may be about to turn the corner, so this could be best time to buy, what with good selection of inventory, motivated sellers and very low interest rates.
North Bay—Greenbrae reports they’re seeing multiple offers in Greenbrae, Larkspur and San Rafael. Houses that come on with a value price and offering the elements a buyer is looking for are winning the real estate game. Southern Marin reports a busy week with five new listings, three pendings, and many more closings scheduled for this week and next. Open house reports are good, continuing to see more qualified buyers out and about. Listing Agents report getting more activity (requests for showings, disclosure packets, etc.) from seemingly real buyers. Most interesting is the below $1 million price range in Mill Valley, Tiburon and Sausalito. Units sold 2009 YTD are actually higher vs. same time a year ago. Santa Rosa reports open houses with 30 groups or more. An increase in escrows opened on non-distressed properties and a few more opens in the higher price range. Sebastopol reports six offers on a Sebastopol property listed at $629,000. There were four offers on one listed at $649,000 and five on a Santa Rosa listing listed at $250,000. We’re seeing new life in the step up market.
Peninsula—Our Burlingame office reports a Baywood San Mateo open—first time on the market in 40 years—had over 125 visitors. Other opens were well-attended across the board. Agents are reporting more serious buyers coming through and the activity in the office and conference rooms would indicate a much more positive direction. The Menlo Park El Camino office reports multiple offers on some properties and yet others still sit. We have a 12 month supply of inventory in Menlo Park vs. five months this time last year. We have 29 months in Woodside versus eight months last year. The oversupply is keeping downward pressure on prices. Redwood City reports that open houses were very well attended. Buyers are beginning to see the value of making offers in this market. Interestingly, both multiple offers were on Previews (luxury) properties. San Mateo reports active listings are up 12%, pending sales are up 7% and solds are down 43%. With active listings about even and pending sales on the rise, it would appear that we are building a solid base for a real estate recovery.
San Francisco—Our Lakeside office reports that sellers and their Agents are seeing the benefit of a well-priced home and buyers are starting to sense the urgency of buying now. The Lombard office reports open traffic was slower this week. They did have two multiple offer situations with one REO in the $400,000 range and a Victorian fixer upper with great potential. The Market Street office reports lots of traffic at open houses. Some Agents felt a different mood about the people attending. They felt more of a sense of urgency on the buyer’s part in looking for homes. A single family in District 10 had its first open on Sunday and went into contract on Tuesday with multiple offers. The Noriega office reports activity in the $500,000 to $700,000 range is very robust. The problem is that good inventory in this price range is very hard to come by and therefore multiple offers are common.
Santa Cruz County—Activity has definitely picked and there continues to be a multitude of buyers out there. There is still some reluctance to move forward with some buyers and the price point between $800,000 to $1.5 million continues to have a lack of buyers. Inventory levels are low and seem to have leveled off; there are currently about 800+ homes currently on the market.
Silicon Valley—The Cupertino De Anza office reports this is the highest number of pending sales for a single week in the last several years in Cupertino. The Cupertino Stevens Creek office concurs noting that it seems like things are picking up; the last two weeks we've seen a lot of action. Our San Jose Almaden office reports that 16 out of this week’s 21 sales were distressed properties. The San Jose Main office reports buyer interest continues to be brisk and we’re seeing excellent open house traffic in the $250,000 to $600,000 price range. Increasing interest in upper priced properties mostly due to lower interest rates. Listing inventory continues to decrease which is producing more multiple offers on available properties. Our Willow Glen office reports that the office is busy and buyers are coming out of the woodwork. We don't want to jinx anything, but things are looking up in Silicon Valley!
South County—Hollister reports that short sales are becoming more noticeable. Multiple offers on most REO sales. Open house activity is on the rise. The Morgan Hill office reports that the big question (for Agents and for clients) is, "Are we there yet?" It seems that everyone is wondering if we have, in fact, reached bottom—in terms of price declines. In South County the inventory of "very affordable" homes is shrinking quickly. Investors and first timers have swooped in and bought most of them. It would seem that prices are stabilizing (at least at the lower-end).
All in all, it seems it was a great week in SF Bay Real Estate – good activity in all price points.
Next week I will release our May Reality Check message and I will focus it on why today’s market brings such prime opportunities for savvy investors. I hope you will check it out.
Have a wonderful week-
Rick
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Last week I reported on positive indicators in the first-time homebuyer market. New mortgage applications for home purchases and refinances were up 77 percent from the same week in April 2008. Mortgage rates continue to average well below 5 percent – 4.7 percent last week on average for 30-year fixed rate loans and 4.5 percent for 15 year loans. Rates like these are a major factor pushing applications. Nearly 600,000 home buyers have already claimed either the $7,500 tax credit from last year or the $8,000 credit for this year, according to IRS data cited by the National Association of Home Builders.
Statewide, CAR reported improvement in both sales numbers and median price. March existing home sales were up 64% from prior year, and median price had the first month-over-month increase since August of 2007. California’s inventory of unsold homes also fell in March to five months, down from 12.2 months in March 2008, making March ‘09 a three year low for existing inventory.
Locally, I want share what’s going on in the East Bay (Alameda and Contra Costa Counties) which has been one of the markets hardest hit by foreclosures and price declines. We are starting to see some real positive news in this market. Specifically (as displayed in the graph below), when comparing accepted offers to new listings, we are currently at 112% which is a 69% increase year over year and an 86% increase from this time two years ago. The graph tells the story:
The positive trend in the East Bay numbers above are impacted greatly by the brisk sale of distressed properties; REO properties are selling at a faster pace than new bank-owned properties are getting released. Good news from our local branch offices in the East Bay is that entry level priced homes which are not bank-owned and not distress sales are also selling faster than new listings are being brought to the market. This is also what we are seeing in our Sonoma County offices and our Santa Clara County offices - the entry level is really moving.
With regards to the luxury market, we’ve had a flurry of high end sales in our San Francisco offices, so I took a look at some recent luxury market statistics. As per the San Francisco MLS, April 2009 was the third consecutive month of increased sales activity over $2 million. With 29 San Francisco $2M+ pending sales in the month, April’s high end activity was more than twice that of March 2009. The same trend occurred in San Mateo and Santa Clara Counties in the $2M+ market, although not as dramatic month-over-month increases.
The note of caution here is that while the numbers of sales are increasing in the high end – we still have a 21 month’s supply of inventory in San Mateo and Santa Clara Counties in the $2M+ market, which is nearly triple the 7.6 month’s supply we had in April ‘08. And San Francisco currently has 19 month’s supply, versus 5.5 a year ago; also nearly triple the MSI for the $2M+ market. Agents in all three counties say that it is the really competitively priced new listings, and the dramatic price reductions of older listings which are causing our recent sales activity in the high end, with a lot of other inventory just sitting.
Here is what our offices reported this week:
East Bay—Berkeley reports they had a slow week two weeks ago and things really picked up this last week. Lots of visitors to open houses, 20 - 45 groups at many of our properties. Getting some good price reductions on some listings that have been out there for awhile. Agents are beginning to have that pricing conversation early on with sellers to not get caught chasing the market downward. Castro Valley reports that short sales continue to dominate the market. The $300K price range buyers have incredible competition. Listing inventory is the lowest that it has been in years. New listings in the market this week are 47 SFR vs. the 200 or so we have seen one year ago. Multiple offers are starting to surface in the $500,000 market. Danville reports the spring market is gaining steam. Inventory in some of our market area is less than two months and the number of new pending sales in the past week shot up 50%. In the Tri-Valley in the past three weeks we have seen a very positive shift in the market. Overall listing inventory declined 6.25% in Livermore; declined 4.8% in Pleasanton; and declined 9.2% in Dublin. Walnut Creek is begging for more inventory.
Monterey County—The market continues on at a steady pace as far as new listings and escrows. There seem to be more buyers on the prowl for good buys these days. Some are voicing the opinion that we may be about to turn the corner, so this could be best time to buy, what with good selection of inventory, motivated sellers and very low interest rates.
North Bay—Greenbrae reports they’re seeing multiple offers in Greenbrae, Larkspur and San Rafael. Houses that come on with a value price and offering the elements a buyer is looking for are winning the real estate game. Southern Marin reports a busy week with five new listings, three pendings, and many more closings scheduled for this week and next. Open house reports are good, continuing to see more qualified buyers out and about. Listing Agents report getting more activity (requests for showings, disclosure packets, etc.) from seemingly real buyers. Most interesting is the below $1 million price range in Mill Valley, Tiburon and Sausalito. Units sold 2009 YTD are actually higher vs. same time a year ago. Santa Rosa reports open houses with 30 groups or more. An increase in escrows opened on non-distressed properties and a few more opens in the higher price range. Sebastopol reports six offers on a Sebastopol property listed at $629,000. There were four offers on one listed at $649,000 and five on a Santa Rosa listing listed at $250,000. We’re seeing new life in the step up market.
Peninsula—Our Burlingame office reports a Baywood San Mateo open—first time on the market in 40 years—had over 125 visitors. Other opens were well-attended across the board. Agents are reporting more serious buyers coming through and the activity in the office and conference rooms would indicate a much more positive direction. The Menlo Park El Camino office reports multiple offers on some properties and yet others still sit. We have a 12 month supply of inventory in Menlo Park vs. five months this time last year. We have 29 months in Woodside versus eight months last year. The oversupply is keeping downward pressure on prices. Redwood City reports that open houses were very well attended. Buyers are beginning to see the value of making offers in this market. Interestingly, both multiple offers were on Previews (luxury) properties. San Mateo reports active listings are up 12%, pending sales are up 7% and solds are down 43%. With active listings about even and pending sales on the rise, it would appear that we are building a solid base for a real estate recovery.
San Francisco—Our Lakeside office reports that sellers and their Agents are seeing the benefit of a well-priced home and buyers are starting to sense the urgency of buying now. The Lombard office reports open traffic was slower this week. They did have two multiple offer situations with one REO in the $400,000 range and a Victorian fixer upper with great potential. The Market Street office reports lots of traffic at open houses. Some Agents felt a different mood about the people attending. They felt more of a sense of urgency on the buyer’s part in looking for homes. A single family in District 10 had its first open on Sunday and went into contract on Tuesday with multiple offers. The Noriega office reports activity in the $500,000 to $700,000 range is very robust. The problem is that good inventory in this price range is very hard to come by and therefore multiple offers are common.
Santa Cruz County—Activity has definitely picked and there continues to be a multitude of buyers out there. There is still some reluctance to move forward with some buyers and the price point between $800,000 to $1.5 million continues to have a lack of buyers. Inventory levels are low and seem to have leveled off; there are currently about 800+ homes currently on the market.
Silicon Valley—The Cupertino De Anza office reports this is the highest number of pending sales for a single week in the last several years in Cupertino. The Cupertino Stevens Creek office concurs noting that it seems like things are picking up; the last two weeks we've seen a lot of action. Our San Jose Almaden office reports that 16 out of this week’s 21 sales were distressed properties. The San Jose Main office reports buyer interest continues to be brisk and we’re seeing excellent open house traffic in the $250,000 to $600,000 price range. Increasing interest in upper priced properties mostly due to lower interest rates. Listing inventory continues to decrease which is producing more multiple offers on available properties. Our Willow Glen office reports that the office is busy and buyers are coming out of the woodwork. We don't want to jinx anything, but things are looking up in Silicon Valley!
South County—Hollister reports that short sales are becoming more noticeable. Multiple offers on most REO sales. Open house activity is on the rise. The Morgan Hill office reports that the big question (for Agents and for clients) is, "Are we there yet?" It seems that everyone is wondering if we have, in fact, reached bottom—in terms of price declines. In South County the inventory of "very affordable" homes is shrinking quickly. Investors and first timers have swooped in and bought most of them. It would seem that prices are stabilizing (at least at the lower-end).
All in all, it seems it was a great week in SF Bay Real Estate – good activity in all price points.
Next week I will release our May Reality Check message and I will focus it on why today’s market brings such prime opportunities for savvy investors. I hope you will check it out.
Have a wonderful week-
Rick
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
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