2009-01-27T11:33:00.000-08:00

Week of December 1-7
This is one of two final editions of Weekly Market Watch for 2008. I am taking a two week hiatus from writing during the final two weeks of the year but will return the first week of 2009 with more weekly updates.

This year will certainly go down as one of the more tumultuous our nation has witnessed. From the rollercoaster ride on Wall Street to the economic woes on Main Street, from the National Economic Stimulus Package to the Emergency Economic Stabilization Act, we’ve all felt the wrath and severity of the 2008 financial crisis.

Housing in Northern California has certainly felt the sting with the most recent figures showing a 40% decline in overall sales price in the Bay Area. Of course much of that is indicative of the mass amounts of REOs on the market. 44.8% of all existing homes sold in the Bay Area had been foreclosed upon at some point within the last 12 months. Counties with the highest number of REO sales have seen the deepest drop in Median Price. Looking at price declines October 2008 over same month last year, Contra Costa County has dropped 46.4%, while San Francisco County, with the smallest price decline for this period, has dropped 10.9%. It’s pretty simple – banks don’t sell foreclosed homes because they choose to, they list and sell because they must. In our higher-end communities, we’re seeing fewer and fewer homes list and sell because the majority of homeowners don’t need to.
Here’s a look at the breakdown-

East Bay—Berkeley is reporting that there are less and less people on broker’s tour although a few new Berkeley listings got 75-100 visitors. Agents are saying that the rumor of interest rates in the fours has put more buyers back on the fence. Castro Valley notes that the market remains good. We have deals processing and we have not felt the holiday slump just yet. Livermore notes that inventory of active listings in the past couple of weeks has declined anywhere from 10% to 20% in Pleasanton, Livermore and Dublin. Total active listings on the market are at their lowest levels in the Tri-Valley in 2008. Total number of pending sales in each of the three cities in the Tri-Valley are down about 10% from December 1, 2008. REO sales continue to dominate the market. Oakland notes that listings have slowed down in our primary market. REOs seem to be slowing also. Our inventory is dropping as it is absorbed or expires. Sales seem steady so far for the month but it definitely is feeling slower. Our Walnut Creek office notes that activity is slow in every area. Prices are continuing to decline in certain areas of Contra Costa County. Inventory is seasonably low. Orinda notes that things have surprisingly picked up a bit. We have had an increase in sales and listings.
Monterey County—The market continues on at its slow pace, however we continue to write offers and open escrows. We are noticing an increasing number of expired listings but that generally happens in December anyway.
North Bay— Southern Marin had its busiest month in quite some time. Our San Rafael office notes that we are seeing an increase of investors and first time home buyers writing offers on the low end of the market. Our Sonoma County offices report that the entry-level REO market continues to drive sales and the market above the $500,000 mark is stagnant.
Peninsula—Our Burlingame office notes that buyers are paying attention to the media news with regard to interest rates and have a positive feeling about the market and that it may be time to buy. Open houses reflected this attitude at all price points. Half Moon Bay concurs noting that this was a busy week for sales (four lots and two homes). The coastal inventory of residential units is down to 128, about 10% lower than during “typical” years at this time. Our Menlo Park El Camino office notes that open houses were about the same last week with Agents feeling some buyers are finally ready to make a move—just wanting to find that perfect property.
San Francisco—Our Lombard office reports that REOS typically receive multiple offers here but now are taking a couple of weeks to sell, not a couple of days. The high end remains slow. Sunday traffic very unpredictable ranging from 0 to well over 100 people through an open house. The Market Street office notes that Agents are getting listings ready for January and trying to sit buyers down to write offers to at least start the process of negotiating.
Santa Cruz County—The median price is still dropping. REO properties are a significant part of the sales which are occurring in Watsonville and San Lorenzo Valley. The upper-end is expected to lag when lending on jumbo loans is limited.
Silicon Valley—Our Cupertino Stevens Creek office notes that the market continues to slow and sellers are holding their homes off the market for the holidays. Buyers continue to circle like sharks looking for the deals. Our Los Altos First Street office points out that the high-end is still very low. Santa Clara County in total only had 12 sales reported on the MLS during November for homes listed over $2 million. Our San Jose Main office notes that REO continue to receive multiple offers. The office did have one Rose Garden listing at $1.2 million that had a large price reduction and then receive two offers. Our San Jose Will Glen office, like many others, is noting that buyers remain cautious and we are seeing sporadic interest in open houses.
South County—Our Hollister office points out that REOs continue to drive much of this market with multiple offers becoming the norm on such properties. We are seeing the usual slow down due to the holidays. Our Morgan Hill office notes that historically the month of December has buyers concentrating on the holidays, family and shopping but this year in South County, things are different. We are seeing buyers who seem anxious to take advantage of low interest rates and great home prices. Agents are reporting that open houses are well-attended and buyers seem ready to enter the market.

Next week DataQuick News is expected to release its November figures. In my final Weekly Market Watch of ’08, I will recap the report and include the most recent market stats.

Until then, I’d like to leave you with a few interesting stories from the week:

Pending Home Sales Holding in Stable Range (NAR) http://www.realtor.org/press_room/news_releases/2008/phs_holding_in_stable_range?LID=RONav0021
Foreclosure filings down (CNNMoney.com) http://money.cnn.com/2008/12/11/real_estate/foreclosures_sink/index.htm?postversion=2008121104
Top 10 Things You Should Expect from the Housing Marketing in 2009 (Yahoo Finance) http://biz.yahoo.com/bw/081210/20081210005036.html?.v=1
Long-Term Numbers Tell A Different Story (Washington Post) http://www.washingtonpost.com/wp-dyn/content/article/2008/12/05/AR2008120501625.html?nav=rss_opinion%2Fcolumns

Have a great week,
Rick

Rick Turley
President, San Francisco/Peninsula/North Bay
Coldwell Banker Residential Brokerage