Spring is in the air: Is the housing market starting to bloom?
There are encouraging signs that the Bay Area’s housing market is finally awakening from its long winter slumber. Spring is traditionally when sales perk up as homeowners try to sell in time for a summer move, and buyers get serious about finding that perfect home. But this year we’re seeing strong indications of an early spring selling season, which could bode well for a housing market recovery.
Many of our markets are seeing increasing sales activity compared to a year ago, with open escrows that will turn into closed sales one to two months down the road. Open houses, in many cases, are attracting armies of buyers, many willing to pay cash for homes if necessary. One third of the offers in Menlo Park have been all cash, for example. Multiple offers are becoming the rule, rather than the exception. There have been 14 to 23 offers on Palo Alto properties priced from $1 million to $1.5 million. There are still more buyers than sellers in most areas, which has created a seller’s market in a number of cities. That’s something you just won’t see in the media.
What’s causing the renewed interest in the local market?
• One impetus undoubtedly is the upcoming deadline for the attractive federal tax credit for first-time and repeat buyers. Buyers must be in escrow by April 30 and close by June 30 to earn the credit, which ranges from $6,500 to $8,000.
• Another reason is the fear that as the Fed begins pulling out of the mortgage backed securities market, mortgage rates will begin to rise from their historically low levels. It’s highly unlikely we’ll see 5 percent fixed-rate mortgages for much longer.
• The stock market plays a huge role in our Bay Area housing market, especially in Silicon Valley and in our luxury Previews market. The NASDAQ is nearly double what it was exactly a year ago when the financial markets appeared to be in freefall, creating tremendous wealth for our Previews buyers.
• Finally, with money earning just a fraction of a percent in one-year CDs and bonds at historically low yields, more investors are once again looking at real estate as a good investment vehicle to diversify their asset mix and take advantage of an under-valued investment class.
Here’s a market-by-market report from our local offices:
North Bay – In Marin County, low inventory is still the biggest obstacle although the spring market seems to be blooming. In Southern Marin, for example, activity is robust with buyers coming out in mass for Sunday Open Houses. Unit sales and median sales price for January and February 2010 are up substantially in all Southern Marin markets. Greenbrae reports that lack of inventory is resulting in more inquiries on currently listed properties + withdrawn/expired listings. There are lots of buyers ready to write offers on the right properties - at all ranges from entry level condos in San Rafael/Novato @ $200K to multi million dollar properties in Ross, Kentfield, Tiburon + Belvedere. In Northern Marin, the majority of home listings entering the market this week and last have not been distressed. All price points are covered. Inventory is still low, but many buyers are out attending open houses. Further north, in Sebastopol, most sales under $500k are multiple offers. Listings in the west county are slow to come onto the market and when they do if they are properly priced they sell quickly. Petaluma is also witnessing homes in under 500K range attracting a frenzy of multiple offers. And Santa Rosa reports that the spring market is slowly coming to life. Listings are up a bit and one agent reported 45 groups through an open house priced over a million.
East Bay—Berkeley is starting to see a gradual increase in inventory, while sales activity remains steady with about 20% resulting in multiple offers. Meanwhile, Fremont reports that activity is picking up on the buyer and listing side due to the expiration of the first-time home buyer’s credit in April. In Livermore, home sales are increasing even as inventory remains low. The Livermore real estate market in 2010 remains very healthy. The active inventory decreased in the past two weeks and the total pending sales in Livermore increased. Multiple offers are still the name of the game.
The Oakland-Piedmont office reports more listings are coming on the market, however the best homes are still in great demand. Oakland has an absorption rate of less than 3 months in the prime part of the market. Both sales and inventory are on the rise in Orinda with open homes robustly attended and several homes are selling at list price or above.
Monterey County— Sales activity is picking up on the Monterey Peninsula, including the higher-priced Previews luxury market in Carmel and Pebble Beach. Still buyers are looking for good values and not willing to overpay on a property no matter how much they like it. Lots of negotiating taking place on older homes needing repairs also. Inventory remains low in the REO areas, so that's where we are seeing most of the multiple offers.
Peninsula— Lots of listings are finally coming on the market in Menlo Park. Buyers are out there but still slow to decide and very skittish. PRICE IS EVERYTHING. One third of the sales in February were all cash! Meanwhile in Palo Alto, multiple offers are commonplace as buyers compete for good listings. There have been 14 to 23 offers on properties priced from $1M to $1.5M if the home is priced correctly. Similarly, there is very little inventory in the Redwood City-San Carlos market, but good open house attendance for those people who have listed their home. The market remains steady in Woodside, while things are starting to pick up in San Mateo.
San Francisco— The Lakeside office reports that sales are climbing, probably because most of the sales are under a million – a segment very much in demand. The $2 million + market has been heating up, according to the Market Street office. Agents say listings in that price range are routinely getting multiple offers. Part of the reason for the jump in activity, agents believe, is that many buyers that were out looking at this time last year decided to rent for a year and those leases are coming up now prompting the clients to start their searches again. The inventory shortage remains critical, according to the Lombard office. They also report that some buyers reluctant to jump back into multiple offers and going way over. Fixer-uppers drawing lots of activity. The Noriega office says February was very active with lots of pending sales.
Silicon Valley– The Cupertino office reports that listings are increasing and there is lots of activity and open homes. The office’s weekend receptionist said that this was the busiest Sunday she has ever seen. About half of the sales are multiple offers as inventory still remains relatively low. Similarly, Los Gatos continues to see low inventory, which is challenging for agents. Meanwhile, in San Jose, the Almaden office reports that both inventory and activity is on the rise with nearly all sales resulting in multiple offers. Our local manager reports that you can’t under-price a property – it will sell for more than if you price it at a higher number. Buyers are still motivated by price. The San Jose Main office says activity in the lower price range (600k or less) continues to be strong with multiple offers on most properties. In Willow Glen, buyers are struggling with rejection as many listings result in multiple offers and, of course, only one winner. Most of the listings are selling at or higher than list price. Our Saratoga office reports the market seems to be developing as expected for this time of year with the upper end is still lagging
South County– The sales and listing activity in South County defies conventionality. This past month a home listed for more than $2.6 million just closed escrow, another listed for $1.6 million was just sold (for cash). Entry level homes continue to sell very quickly - often with multiple offers. It seems that the middle range properties (those listed between $700,000 and $800,000) linger on the market. A new home sub-division in Morgan Hill just began offering homes listed in the low $600,000 range. The first phase is almost sold out. The market is most challenging for "move-up" buyers but very attractive to sellers of lower priced properties. One would call the South County market a "seller's" market (dependent upon the price range).
One last thought: The financial and real estate markets are often intertwined in the Bay Area, and both are driven by consumer confidence. While our economic recovery is still quite fragile and unemployment is still high, there are growing signs things are indeed getting better. Friday’s better-than-expected jobs report out of the Labor Department was one more macro economic indication that we’re moving in the right direction, along with improved corporate earnings. The stock market is continuing its upward movement, which can only help our region’s consumer confidence.
Will the housing market be next to join the party? Only time will tell.
Have a great week!
Rick
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Wednesday, March 10, 2010
Weekly Market Watch
A Seller’s Market?
Hard to believe, but many homes drawing multiple offers again as listing shortages continue
My how things have changed in just one year! A year ago at this time, many homes were languishing on the market as buyers stayed on the sidelines, worrying about their jobs, the sharp decline in their 401k accounts, and whether housing prices would ever rise again. Today, many of those buyers have swallowed their fears and are out in force once again, spurred by an improving economy, a solid recovery in the financial markets, and federal home buyer tax credits that will expire this spring.
While no one claims the housing market is out of the woods yet, an unusual dynamic is occurring in many communities around the Bay Area: Despite the choppy housing market, there is an army of confident, well-qualified buyers out searching for homes, but many sellers are now sitting on the sidelines! One listing in San Francisco’s Outer Mission neighborhood priced in the mid-$500,000 drew more than 100 groups during a two hour open house during the past holiday weekend.
Inventory shortages continue to be the challenge in many areas. In Santa Clara County and the East Bay, for example, the number of homes for sale is standing at half of what it was a year ago! This has resulted in as many as half of the listings on the market attracting multiple offers as buyers fight it out for the best properties.
This conundrum has resulted in prices rising even as sales are falling. DataQuick, the La Jolla-based research firm, reported that the median sale price of homes and condos in the Bay Area shot up almost 17 percent year over year in January while sales dipped 4 percent. The biggest jump in the median price was 18.3 percent in San Mateo, but all counties (except Napa) saw strong increases. (see chart below) The upper end of the market is particularly sensitive to this trend, as illustrated by Santa Clara County, which saw sales of million-dollar homes half of what they were a year ago even as prices rose 4 percent, according to Coldwell Banker Residential Brokerage’s luxury market report.
Sales Volume Median Price
All homes Jan-09 Jan-10 %Chng Jan-09 Jan-10 %Chng
Alameda 994 936 -5.8% $300,000 $341,000 13.7%
Contra Costa 1,333 1,078 -19.1% $220,000 $257,250 16.9%
Marin 122 153 25.4% $525,000 $535,000 1.9%
Napa 78 87 11.5% $370,000 $350,000 -5.4%
Santa Clara 1,037 1,137 9.6% $400,000 $451,000 12.8%
San Francisco 229 311 35.8% $562,000 $629,000 11.9%
San Mateo 273 355 30.0% $489,500 $579,000 18.3%
Solano 560 462 -17.5% $192,500 $201,000 4.4%
Sonoma 424 334 -21.2% $299,750 $325,000 8.4%
Bay Area 5,050 4,853 -3.9% $300,000 $350,000 16.7%
Source: MDA DataQuick Information Systems, www.DQNews.com
Inventory levels are slowly rising in some communities, and the balance between buyers and sellers could shift in the weeks and months ahead. But right now it’s a good time to be a seller if you price your home for today’s market.
Here’s a market-by-market breakdown from our local offices:
North Bay – With a shortage of inventory, multiple offers are still the norm in Petaluma. Most agents are working with 4-6 qualified buyers ready to go. A lot of offers are written with fierce competition, and lots of activity in the $500,000 price range. Northern Marin reports lots of multiple offers on short sales, while the Santa Rosa market is seeing a growing number of sales. While there is almost no inventory now, there is a small flurry of new listings coming on the market. Lack of inventory continues to be a problem in Sebastopol with listings under $500,000 instantly getting multiple offers. In Southern Marin, sales have increased greatly so far this year versus same period a year ago with Tiburon and Belvedere experiencing almost three times the number of sales.
East Bay—Inventory still low but slowly building in many cities. Berkeley reports the market is still slow and prices are far below several years ago. A local appraiser told Realtors that the $2 million plus market is so slow that appraisers are going back much further than three or six months to find comps. In Castro Valley listings abound. There are homes for sale in all neighborhoods, which is resulting in fewer multiple offers. The Danville market still needs listings to sell and to hold open. Homes in some price ranges are selling so fast that Realtors are not getting much open house time to meet new buyers! Livermore reports the upper end of the market improved greatly in January with three pending sales above a million. Overall, there’s a healthy market in the Tri-Valley area of Livermore, Pleasanton, and Dublin. All three cities have experienced an increase in listings and pending sales in 2010 with multiple offers common. In Pleasanton, inventory shortages continue, with multiple offers on homes under $500,000 common. Buyers are eager to get into a home due to tax credit. Oakland-Piedmont: Lots of action this month keeping agents busy. Both Orinda and Walnut Creek are seeing listings and activity on the rise.
Monterey County— The market is steady on the Monterey Peninsula, where locals and visitors alike enjoyed a great three-day President’s Day weekend and the AT&T Pro Am golf tournament. Realtors were busy with inquiries and showing properties, though mostly sales from events like this come later. Nevertheless, the Peninsula did see a number of sales, including a multi-million dollar property. Inventory is plentiful in the higher-priced areas of Carmel and Pebble Beach, but scarce in the lower-priced areas of Seaside and Marina, where we are waiting for another wave of REOs to hit the market.
Peninsula— Burlingame reports less inventory than last year and more buyer interest, including those paying all cash. Market seems to change day by day, but overall there are more sales and more multiple offers. In Half Moon Bay, agents say sales are slow although the number of listings are picking up. It’s taking much more time and paperwork just in getting offers accepted, with many counters. Things are holding steady in Menlo Park, with the market showing signs of coming out of the winter hibernation. Inventory is slowly increasing in Palo Alto including higher end properties, in the $2 million to $4 million and some above $5 million. Buyers and sellers are more optimistic that things are turning around. San Mateo is seeing strong activity in the post-Super Bowl market while Woodside and Portola Valley markets are quiet. There are buyers looking for homes, but the number of homes for sale is just too low.
San Francisco— Lakeside reports most of the activity is for properties under $1.2 million. A lot of energy is in the first time home buyer market as we approach the deadline for the federal tax credit. Inventory is still low for the Lombard office. Buyers are often surprised that they’re in multiple offer situations in this market. The Market Street office reports that agents are seeing a lot of well qualified buyers coming to their listings, many with a lot of cash. Multiple offers are still the order of the day, especially in the first time homebuyer’s price points. Properties that are in desirable locations are going into contract after the first open house. The Noriega office has seen a lot more activity in the last two weeks. There seems to be a renewed sense of urgency for buyers as the tax credit deadline gets closer. One listing in the Outer Mission priced in the mid-$500,000 drew more than 100 groups during a two hour open house during the past holiday weekend. The Van Ness office is noticing lighter inventory of available homes, and had a handful of sales ratified over $2 million.
Santa Cruz County: There are many multiple offers on homes under $700,000 and REO properties and short sales. REOs and short sales continue to have a very strong influence in sales, pricing, and overall market activity. There seems to be a lot of anxious buyers waiting on the sidelines for the right property to appear. Buyers seem to acknowledge with some positive economic news that it is an optimum time to purchase – maybe the most optimal time ever. Inventory still continues to be an issue, although as we move toward spring and warmer weather we are seeing more homes coming on the market.
Silicon Valley: Cupertino continues to see a severe shortage of homes for sale, with lots of multiple offers as buyers compete for good listings. In Los Altos, open house attendance is picking up as is overall activity, but the higher end market – above $2 million – is still slow. Similarly, things are slowly improving in the Los Gatos market with inventory and sales increasing. In San Jose’s Almaden and Willow Glen neighborhoods, inventory is gradually increasing although still far too low for buyer interest. Inventory in San Jose is half of what it was a year ago in all local markets, but sales are up between 30 and 70% depending on neighborhood. The Saratoga market started very slowly the first few weeks of January, but Realtors have seen a definite increase in activity.
South County: In the South County it has become the “Tale of Two Cities.” As potential buyers show interest in this area, they can select from either Morgan Hill or Gilroy. In both cities, inventory is down, but Gilroy listings tend to be short sales or REO properties. Morgan Hill has far less inventory, but non-short and REO sales are now the norm. Agents are challenged when showing properties and well priced properties receive multiple offers.
In a quick update on our Previews properties – There continues to be gradual improvement in the luxury end of the market in many areas. For example, in the last couple of weeks the Santa Cruz area offices report multiple offers on listings for $2.4 million, $2.1 million, and $1.2 million. A $7 million dollar property that literally sits on the ocean is now $4.9 million and getting lots of activity and could sell shortly.
Overall, a few dips of the Dow under 10,000 don’t seem to stick, and the result is an improvement in consumer confidence.
Until next time - Have a great week!
Rick
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Hard to believe, but many homes drawing multiple offers again as listing shortages continue
My how things have changed in just one year! A year ago at this time, many homes were languishing on the market as buyers stayed on the sidelines, worrying about their jobs, the sharp decline in their 401k accounts, and whether housing prices would ever rise again. Today, many of those buyers have swallowed their fears and are out in force once again, spurred by an improving economy, a solid recovery in the financial markets, and federal home buyer tax credits that will expire this spring.
While no one claims the housing market is out of the woods yet, an unusual dynamic is occurring in many communities around the Bay Area: Despite the choppy housing market, there is an army of confident, well-qualified buyers out searching for homes, but many sellers are now sitting on the sidelines! One listing in San Francisco’s Outer Mission neighborhood priced in the mid-$500,000 drew more than 100 groups during a two hour open house during the past holiday weekend.
Inventory shortages continue to be the challenge in many areas. In Santa Clara County and the East Bay, for example, the number of homes for sale is standing at half of what it was a year ago! This has resulted in as many as half of the listings on the market attracting multiple offers as buyers fight it out for the best properties.
This conundrum has resulted in prices rising even as sales are falling. DataQuick, the La Jolla-based research firm, reported that the median sale price of homes and condos in the Bay Area shot up almost 17 percent year over year in January while sales dipped 4 percent. The biggest jump in the median price was 18.3 percent in San Mateo, but all counties (except Napa) saw strong increases. (see chart below) The upper end of the market is particularly sensitive to this trend, as illustrated by Santa Clara County, which saw sales of million-dollar homes half of what they were a year ago even as prices rose 4 percent, according to Coldwell Banker Residential Brokerage’s luxury market report.
Sales Volume Median Price
All homes Jan-09 Jan-10 %Chng Jan-09 Jan-10 %Chng
Alameda 994 936 -5.8% $300,000 $341,000 13.7%
Contra Costa 1,333 1,078 -19.1% $220,000 $257,250 16.9%
Marin 122 153 25.4% $525,000 $535,000 1.9%
Napa 78 87 11.5% $370,000 $350,000 -5.4%
Santa Clara 1,037 1,137 9.6% $400,000 $451,000 12.8%
San Francisco 229 311 35.8% $562,000 $629,000 11.9%
San Mateo 273 355 30.0% $489,500 $579,000 18.3%
Solano 560 462 -17.5% $192,500 $201,000 4.4%
Sonoma 424 334 -21.2% $299,750 $325,000 8.4%
Bay Area 5,050 4,853 -3.9% $300,000 $350,000 16.7%
Source: MDA DataQuick Information Systems, www.DQNews.com
Inventory levels are slowly rising in some communities, and the balance between buyers and sellers could shift in the weeks and months ahead. But right now it’s a good time to be a seller if you price your home for today’s market.
Here’s a market-by-market breakdown from our local offices:
North Bay – With a shortage of inventory, multiple offers are still the norm in Petaluma. Most agents are working with 4-6 qualified buyers ready to go. A lot of offers are written with fierce competition, and lots of activity in the $500,000 price range. Northern Marin reports lots of multiple offers on short sales, while the Santa Rosa market is seeing a growing number of sales. While there is almost no inventory now, there is a small flurry of new listings coming on the market. Lack of inventory continues to be a problem in Sebastopol with listings under $500,000 instantly getting multiple offers. In Southern Marin, sales have increased greatly so far this year versus same period a year ago with Tiburon and Belvedere experiencing almost three times the number of sales.
East Bay—Inventory still low but slowly building in many cities. Berkeley reports the market is still slow and prices are far below several years ago. A local appraiser told Realtors that the $2 million plus market is so slow that appraisers are going back much further than three or six months to find comps. In Castro Valley listings abound. There are homes for sale in all neighborhoods, which is resulting in fewer multiple offers. The Danville market still needs listings to sell and to hold open. Homes in some price ranges are selling so fast that Realtors are not getting much open house time to meet new buyers! Livermore reports the upper end of the market improved greatly in January with three pending sales above a million. Overall, there’s a healthy market in the Tri-Valley area of Livermore, Pleasanton, and Dublin. All three cities have experienced an increase in listings and pending sales in 2010 with multiple offers common. In Pleasanton, inventory shortages continue, with multiple offers on homes under $500,000 common. Buyers are eager to get into a home due to tax credit. Oakland-Piedmont: Lots of action this month keeping agents busy. Both Orinda and Walnut Creek are seeing listings and activity on the rise.
Monterey County— The market is steady on the Monterey Peninsula, where locals and visitors alike enjoyed a great three-day President’s Day weekend and the AT&T Pro Am golf tournament. Realtors were busy with inquiries and showing properties, though mostly sales from events like this come later. Nevertheless, the Peninsula did see a number of sales, including a multi-million dollar property. Inventory is plentiful in the higher-priced areas of Carmel and Pebble Beach, but scarce in the lower-priced areas of Seaside and Marina, where we are waiting for another wave of REOs to hit the market.
Peninsula— Burlingame reports less inventory than last year and more buyer interest, including those paying all cash. Market seems to change day by day, but overall there are more sales and more multiple offers. In Half Moon Bay, agents say sales are slow although the number of listings are picking up. It’s taking much more time and paperwork just in getting offers accepted, with many counters. Things are holding steady in Menlo Park, with the market showing signs of coming out of the winter hibernation. Inventory is slowly increasing in Palo Alto including higher end properties, in the $2 million to $4 million and some above $5 million. Buyers and sellers are more optimistic that things are turning around. San Mateo is seeing strong activity in the post-Super Bowl market while Woodside and Portola Valley markets are quiet. There are buyers looking for homes, but the number of homes for sale is just too low.
San Francisco— Lakeside reports most of the activity is for properties under $1.2 million. A lot of energy is in the first time home buyer market as we approach the deadline for the federal tax credit. Inventory is still low for the Lombard office. Buyers are often surprised that they’re in multiple offer situations in this market. The Market Street office reports that agents are seeing a lot of well qualified buyers coming to their listings, many with a lot of cash. Multiple offers are still the order of the day, especially in the first time homebuyer’s price points. Properties that are in desirable locations are going into contract after the first open house. The Noriega office has seen a lot more activity in the last two weeks. There seems to be a renewed sense of urgency for buyers as the tax credit deadline gets closer. One listing in the Outer Mission priced in the mid-$500,000 drew more than 100 groups during a two hour open house during the past holiday weekend. The Van Ness office is noticing lighter inventory of available homes, and had a handful of sales ratified over $2 million.
Santa Cruz County: There are many multiple offers on homes under $700,000 and REO properties and short sales. REOs and short sales continue to have a very strong influence in sales, pricing, and overall market activity. There seems to be a lot of anxious buyers waiting on the sidelines for the right property to appear. Buyers seem to acknowledge with some positive economic news that it is an optimum time to purchase – maybe the most optimal time ever. Inventory still continues to be an issue, although as we move toward spring and warmer weather we are seeing more homes coming on the market.
Silicon Valley: Cupertino continues to see a severe shortage of homes for sale, with lots of multiple offers as buyers compete for good listings. In Los Altos, open house attendance is picking up as is overall activity, but the higher end market – above $2 million – is still slow. Similarly, things are slowly improving in the Los Gatos market with inventory and sales increasing. In San Jose’s Almaden and Willow Glen neighborhoods, inventory is gradually increasing although still far too low for buyer interest. Inventory in San Jose is half of what it was a year ago in all local markets, but sales are up between 30 and 70% depending on neighborhood. The Saratoga market started very slowly the first few weeks of January, but Realtors have seen a definite increase in activity.
South County: In the South County it has become the “Tale of Two Cities.” As potential buyers show interest in this area, they can select from either Morgan Hill or Gilroy. In both cities, inventory is down, but Gilroy listings tend to be short sales or REO properties. Morgan Hill has far less inventory, but non-short and REO sales are now the norm. Agents are challenged when showing properties and well priced properties receive multiple offers.
In a quick update on our Previews properties – There continues to be gradual improvement in the luxury end of the market in many areas. For example, in the last couple of weeks the Santa Cruz area offices report multiple offers on listings for $2.4 million, $2.1 million, and $1.2 million. A $7 million dollar property that literally sits on the ocean is now $4.9 million and getting lots of activity and could sell shortly.
Overall, a few dips of the Dow under 10,000 don’t seem to stick, and the result is an improvement in consumer confidence.
Until next time - Have a great week!
Rick
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Weekly Market Watch
Will Saint’s Victory Be Heavenly for the (Housing) Market?
Congratulations to the New Orleans Saints on an exciting Super Bowl victory yesterday! Now, the question is whether the Saints first championship will translate into a heavenly year for the stock market and – by extension – the housing market.
Popular wisdom maintains that the outcome of the big game can determine the stock market’s direction in the coming year. If the winning team is from the old NFL (now NFC), the theory goes, it forecasts a good year for the market vs. an AFC victory. So here’s to the former “Aints” and to a super year in 2010.
Football lore aside, we are seeing the market starting to pick up in much of the Bay Area as we head into the post-Super Bowl season for home buying. In general, 2010 is starting off considerably better than 2009 in terms of sales and overall activity. Open houses are seeing non-stop activity in many communities, an early indicator of future sales. There continues to be a shortage of properties in prime communities, but our offices are seeing a steady increase of listings as buyers realize that there are opportunities for them in this market.
The lack of inventory continues to make well-maintained, reasonably priced homes stand out. One property in southern Marin County listed at $1.35 million, for example, received 11 offers. While that was the exception to the rule, we are seeing multiple offers in many communities. Buyers are circling attractive listings and many are willing to make all-cash offers to win out.
I think we’ll see a much earlier spring selling buying season this year due to the upcoming deadline for the home buyer tax credit. The season typically takes off in March and runs through May. But buyers who want to claim this year's tax credit, which ranges from $6,500 to $8,000, must purchase their home by April 30 and close by June 30. So look for more activity than normal in February and March as we head toward the finish line.
Here’s a market-by-market breakdown from our local offices:
East Bay—Berkley reports price reductions in the over 1.5 million range and even at the million plus range. Castro Valley stated many new listings are coming on the market. A welcome surprise. However, cash is still king. We recently sold a 600K plus house, all cash. Danville reported that the high end is still slower than the rest of the market but activity is picking up. Inventory is still an issue in the less than million market. Many homes are being sold with multiple offers, which is helping to firm up sales prices. Fremont supports the dynamic indicating extraordinary low inventories with a steady buyer pool actively pursuing properties. Walnut Creek also reported the lower priced market is extremely active. An REO listing in Antioch had 9 offers at 9:00 one morning when one of the agents called to check for a client. When she checked back at 12:00 noon, there were 49 OFFERS.
Monterey County— The Monterey Peninsula market is quite active for January, in terms of sales, open homes and even listings, which are on the rise. The Peninsula offices report continued low inventory levels in lower-priced REO areas, but they are seeing more activity in higher priced properties. In fact, they closed on two properties over $4.5 million last week.
North Bay— Low inventory is still a common issue in many areas of the North Bay. The result has been tremendous activity in many of the open homes that are out there. Novato reported one open house had 70 people, another 50. Encouraging news in Southern Marin is that four new listings over $1 million last week received multiple offers, including one at $1.35 million that received 11 offers. Greenbrae reports steady traffic at open houses but inventory still lagging behind consumer demand. Smart sellers are starting to realize now is a good time to have their home on the market. There were 13 multiple offers in Santa Rosa as open escrows are running high.
Peninsula—Activity remains steady or even increasing on the Peninsula, but low inventory continues to be a hurdle in many areas. Inventory is close to half of what is was last year, Burlingame reports. Buyers are snapping up well-priced homes when they appear, many with all-cash offers. Half Moon Bay reports seeing a dramatic increase in open house traffic with buyer’s looking for the best deal and the lowest price. They report that sellers are starting to be more realistic on their list price – starting at market value rather than reducing each month. The Menlo Park offices also report that the local market is inventory challenged. Palo Alto and Redwood City are seeing sales activity slowly picking up as well. In San Mateo, anything under $1 million is selling very quickly, while the high-end Woodside market is very slow right now.
San Francisco— Sales activity has been steady in much of The City, with buyers ready to move when they find the right property. The Lombard office reports good listings are going fast, and multiple offers are definitely back. In some cases, offers are coming in without financing contingencies despite the challenging mortgage market. Market Street reported 11 offers were received on an extreme fixer upper and seven offers were received on an entry level home. Agents are very busy writing offers, they stated. The Noriega offices reports deals are extremely difficult to get ratified in this market, while the Van Ness are is seeing a pick up in both listings and sales.
Santa Cruz County: Market activity continues to be picking up in Santa Cruz as we move toward warmer weather. Lots and lots of buyers out there circling, ready to make offers. Open houses for the most part have been well attended, weather permitting. The inventory continues to drive the multiple offer situation especially under $700K - driving prices in some areas up. Appraisals continue to be an issue, and lending is taking longer. Some better economic news has prompted more people out along with the continued low interest rates.
Silicon Valley: Cupertino reports that 2010 is starting out much better than 2009, with non-stop activity in open houses and nearly all sales triggering multiple offers. In Los Altos, the market is waking up from the winter hibernation with new listings coming on the market and buyer traffic is increasing at open houses. But it’s still slow for sales above $2 million. Similarly, Los Gatos and the San Jose Almaden area are seeing an increase in both listings and sales. Saratoga and San Jose Main are seeing a slow but sure increase in sales activity.
South County: Morgan Hill reports the buzz among agents continues to be the lack of inventory, sending many agents “back to basics” by talking to homeowners to explain why this could be a very advantageous time to list their home for sale. The old Real Estate adage, "List to Last," rings true.
In a quick overview of our Previews properties – I’ve noticed an uptick in our luxury sales in areas that have been somewhat slower to see activity. For example- all within the past two weeks, in Burlingame we closed a $4.2M property - Carmel offices have closed three transactions at $4.7M, $4.5M, and $3.9M. Woodside closed a $5.8M sale, and our Menlo Park Santa Cruz office closed a transaction in Atherton over $11M. This certainly reinforces what we all know to be true – luxury buyers are out there, and they are purchasing properties when they find what they like, at what they perceive to be fair market value.
Again -sorry for this report being late - and have a great week!
Rick
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Congratulations to the New Orleans Saints on an exciting Super Bowl victory yesterday! Now, the question is whether the Saints first championship will translate into a heavenly year for the stock market and – by extension – the housing market.
Popular wisdom maintains that the outcome of the big game can determine the stock market’s direction in the coming year. If the winning team is from the old NFL (now NFC), the theory goes, it forecasts a good year for the market vs. an AFC victory. So here’s to the former “Aints” and to a super year in 2010.
Football lore aside, we are seeing the market starting to pick up in much of the Bay Area as we head into the post-Super Bowl season for home buying. In general, 2010 is starting off considerably better than 2009 in terms of sales and overall activity. Open houses are seeing non-stop activity in many communities, an early indicator of future sales. There continues to be a shortage of properties in prime communities, but our offices are seeing a steady increase of listings as buyers realize that there are opportunities for them in this market.
The lack of inventory continues to make well-maintained, reasonably priced homes stand out. One property in southern Marin County listed at $1.35 million, for example, received 11 offers. While that was the exception to the rule, we are seeing multiple offers in many communities. Buyers are circling attractive listings and many are willing to make all-cash offers to win out.
I think we’ll see a much earlier spring selling buying season this year due to the upcoming deadline for the home buyer tax credit. The season typically takes off in March and runs through May. But buyers who want to claim this year's tax credit, which ranges from $6,500 to $8,000, must purchase their home by April 30 and close by June 30. So look for more activity than normal in February and March as we head toward the finish line.
Here’s a market-by-market breakdown from our local offices:
East Bay—Berkley reports price reductions in the over 1.5 million range and even at the million plus range. Castro Valley stated many new listings are coming on the market. A welcome surprise. However, cash is still king. We recently sold a 600K plus house, all cash. Danville reported that the high end is still slower than the rest of the market but activity is picking up. Inventory is still an issue in the less than million market. Many homes are being sold with multiple offers, which is helping to firm up sales prices. Fremont supports the dynamic indicating extraordinary low inventories with a steady buyer pool actively pursuing properties. Walnut Creek also reported the lower priced market is extremely active. An REO listing in Antioch had 9 offers at 9:00 one morning when one of the agents called to check for a client. When she checked back at 12:00 noon, there were 49 OFFERS.
Monterey County— The Monterey Peninsula market is quite active for January, in terms of sales, open homes and even listings, which are on the rise. The Peninsula offices report continued low inventory levels in lower-priced REO areas, but they are seeing more activity in higher priced properties. In fact, they closed on two properties over $4.5 million last week.
North Bay— Low inventory is still a common issue in many areas of the North Bay. The result has been tremendous activity in many of the open homes that are out there. Novato reported one open house had 70 people, another 50. Encouraging news in Southern Marin is that four new listings over $1 million last week received multiple offers, including one at $1.35 million that received 11 offers. Greenbrae reports steady traffic at open houses but inventory still lagging behind consumer demand. Smart sellers are starting to realize now is a good time to have their home on the market. There were 13 multiple offers in Santa Rosa as open escrows are running high.
Peninsula—Activity remains steady or even increasing on the Peninsula, but low inventory continues to be a hurdle in many areas. Inventory is close to half of what is was last year, Burlingame reports. Buyers are snapping up well-priced homes when they appear, many with all-cash offers. Half Moon Bay reports seeing a dramatic increase in open house traffic with buyer’s looking for the best deal and the lowest price. They report that sellers are starting to be more realistic on their list price – starting at market value rather than reducing each month. The Menlo Park offices also report that the local market is inventory challenged. Palo Alto and Redwood City are seeing sales activity slowly picking up as well. In San Mateo, anything under $1 million is selling very quickly, while the high-end Woodside market is very slow right now.
San Francisco— Sales activity has been steady in much of The City, with buyers ready to move when they find the right property. The Lombard office reports good listings are going fast, and multiple offers are definitely back. In some cases, offers are coming in without financing contingencies despite the challenging mortgage market. Market Street reported 11 offers were received on an extreme fixer upper and seven offers were received on an entry level home. Agents are very busy writing offers, they stated. The Noriega offices reports deals are extremely difficult to get ratified in this market, while the Van Ness are is seeing a pick up in both listings and sales.
Santa Cruz County: Market activity continues to be picking up in Santa Cruz as we move toward warmer weather. Lots and lots of buyers out there circling, ready to make offers. Open houses for the most part have been well attended, weather permitting. The inventory continues to drive the multiple offer situation especially under $700K - driving prices in some areas up. Appraisals continue to be an issue, and lending is taking longer. Some better economic news has prompted more people out along with the continued low interest rates.
Silicon Valley: Cupertino reports that 2010 is starting out much better than 2009, with non-stop activity in open houses and nearly all sales triggering multiple offers. In Los Altos, the market is waking up from the winter hibernation with new listings coming on the market and buyer traffic is increasing at open houses. But it’s still slow for sales above $2 million. Similarly, Los Gatos and the San Jose Almaden area are seeing an increase in both listings and sales. Saratoga and San Jose Main are seeing a slow but sure increase in sales activity.
South County: Morgan Hill reports the buzz among agents continues to be the lack of inventory, sending many agents “back to basics” by talking to homeowners to explain why this could be a very advantageous time to list their home for sale. The old Real Estate adage, "List to Last," rings true.
In a quick overview of our Previews properties – I’ve noticed an uptick in our luxury sales in areas that have been somewhat slower to see activity. For example- all within the past two weeks, in Burlingame we closed a $4.2M property - Carmel offices have closed three transactions at $4.7M, $4.5M, and $3.9M. Woodside closed a $5.8M sale, and our Menlo Park Santa Cruz office closed a transaction in Atherton over $11M. This certainly reinforces what we all know to be true – luxury buyers are out there, and they are purchasing properties when they find what they like, at what they perceive to be fair market value.
Again -sorry for this report being late - and have a great week!
Rick
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Weekly Market Watch
New Year’s Update on Bay Area Housing Market: Where are the sellers!
As the New Year gets rolling, Realtors from Sonoma to Carmel and San Francisco to Danville are noticing a surprising trend –a critical shortage of homes for sale. At the entry level, and in many mid-price level markets, we have plenty of people willing to buy, just not enough homes to go around. My how things have changed in the past year! To quote one of our managers, the new lament among local Realtors is, "so many buyers, so few listings.” As an example, take a look at the inventory in San Mateo County. December inventory was down -20.5% from November and down -36% from the previous year.
What’s happening? First-time buyers are rushing to take advantage of the federal tax credit before it expires this spring. Unfortunately, we aren’t seeing a commensurate number of sellers bringing homes to the market to capitalize on this. There are inventory shortages throughout the Bay Area. Open homes are attracting a flood of serious buyers. The result is that attractive, well-priced homes in good neighborhoods are getting lots of interest and, in some cases, multiple offers.
Without as much competition for buyer’s attention, a well-maintained home could stand out like a redwood tree in a desert. This may not last for long as more homes come on the market in the weeks and months ahead (don’t forget the old adage that people start listing homes after the Super Bowl).
And with that, let’s take a look at what’s happening in the local housing markets:
- East Bay—Berkeley reports a slow start to the year. We did get several multiple offers though, four on a listing priced under $300k and three on a listing priced at $1,045,000. Danville reports we have a critical inventory shortage. There has been a decrease of 88% in the month’s supply of homes for sale in Contra Costa County over the past two years. Right now, in certain areas and price ranges, it is a seller's market with many properties getting multiple offers. Livermore reports inventory is also at the lowest level in the past two years. Listings declined 4.5% and pending sales were up 6.5%. The market is healthy with most of the activity below $750,000. We still have a high percentage of REO and short sales in Livermore especially in the attached homes (i.e. condos and townhomes). Multiple offers are still common below $600,000. Castro Valley reports an increase in the listings, with people resuming their plans after the holidays.
- Monterey County— 2010 has started off with lots of activity, though most of it is REOs and Short Sales, unlike most years that are slow until into February. As expected for first of year, the listings are coming in quickly and we're seeing lots of price reductions, as sellers are becoming increasingly competitive.
- North Bay—Greenbrae reports it is seeing some multiple offers again in the $700-800K range. Consumers seem to be ready to pull the trigger. We expect more inventory in coming weeks. Open houses are well attended. Southern Marin reports inventory is extremely low but sales are equal to or in Mill Valley’s case more than this time last year. Santa Rosa reported a strong start with open escrows. However, the weather and the shortage of inventory below $400K may slow the tide in the short term.
- Peninsula—Burlingame reports listings are starting to come in and pent up buyers are beginning to get out and make offers. Great listings are being snapped up quickly. We need more inventory. Half Moon Bay reports the market is slow on the coast with low inventory. The sellers are waiting a couple more weeks to market their property. Our Menlo Park-Santa Cruz office reported after a strong finish to 2009, there seems to be a bit of a lull at the start of 2010. Offers are being written, sellers are slow to react. The downtown Palo Alto office reported the market is still slow. We anticipate that after the Super Bowl weekend for things to get quite busy.
- San Francisco— The Lombard office reported the post holiday listing surge has not happened yet. Buyers are out there but agents comment on the lack of inventory. Multiple offers common of late with all cash deals winning out over all others. The Market Street office reported new properties coming to market are selling pretty quickly and most with multiple offers if they don’t take the first one. Serious buyers are coming in to all the open houses especially at the entry level price points. They also are seeing a lot of cash buyers just looking for the right deal. First 2 weeks of 2010 at SF Van Ness seemed lack-luster, but the third week was a huge week of new sales, all price points, with several over $3M.
- Santa Cruz County: New listings are starting to come in as we move closer to February, although inventory levels remain low overall in the county. South County bank-owned properties have drastically reduced the available inventory there with less than 20 active listings in the Watsonville area. We have received a few new REOs in the past 6 weeks and these are being released one or two at a time rather than 10 or 15 or 20. This inventory is definitely being controlled carefully by the banks. The upper end market, over $2 million, remains very slow. Given the current market conditions, and time of year, sales are better than expected for January.
- Silicon Valley: Cupertino reports things are heating up and open houses are wild. Almaden reports low inventory makes it difficult to even find homes to hold open. Over $1.1 million is very slow despite good interest rates. Agents are busy working and beginning to go on listing appointments. I expect our inventory to grow by 50 per week over the next several weeks. Willow Glen reports listings are on the increase. Open houses are somewhat busy as well. Saratoga reported new listings seem to be tracking as expected with the beginning of the year market. Sales seem to be lagging though. Hopefully, it's just a slow start and will pick up steam as the month progresses.
- South County: Morgan Hill reports the new "lament" of the South County Realtor, "so many buyers, so few listings.” With interest rates still very low and prices so attractive, demand is outpacing supply for homes in all price ranges. Well priced and well maintained homes do not stay on the market very long here in South County.
So by and large, it’s pretty much a conversation about inventory when you talk about our Bay Area real estate market. Even the luxury market, while admittedly slower than lower price points, has inventories trending down. Take San Francisco, for example, for homes over $2 million. The luxury market finished out December 2009 with a 6 months supply of inventory – compared to 10 months supply for the same period in 2008. You’ll find similar trends in the high end in many of our communities in Silicon Valley, Peninsula, Marin, and the East Bay. Accuracy in pricing and attention to detail in showing condition remains critical in the luxury markets, but sales activity is picking up and inventories are going down.
Until next time, have a great week!
Rick
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
As the New Year gets rolling, Realtors from Sonoma to Carmel and San Francisco to Danville are noticing a surprising trend –a critical shortage of homes for sale. At the entry level, and in many mid-price level markets, we have plenty of people willing to buy, just not enough homes to go around. My how things have changed in the past year! To quote one of our managers, the new lament among local Realtors is, "so many buyers, so few listings.” As an example, take a look at the inventory in San Mateo County. December inventory was down -20.5% from November and down -36% from the previous year.
What’s happening? First-time buyers are rushing to take advantage of the federal tax credit before it expires this spring. Unfortunately, we aren’t seeing a commensurate number of sellers bringing homes to the market to capitalize on this. There are inventory shortages throughout the Bay Area. Open homes are attracting a flood of serious buyers. The result is that attractive, well-priced homes in good neighborhoods are getting lots of interest and, in some cases, multiple offers.
Without as much competition for buyer’s attention, a well-maintained home could stand out like a redwood tree in a desert. This may not last for long as more homes come on the market in the weeks and months ahead (don’t forget the old adage that people start listing homes after the Super Bowl).
And with that, let’s take a look at what’s happening in the local housing markets:
- East Bay—Berkeley reports a slow start to the year. We did get several multiple offers though, four on a listing priced under $300k and three on a listing priced at $1,045,000. Danville reports we have a critical inventory shortage. There has been a decrease of 88% in the month’s supply of homes for sale in Contra Costa County over the past two years. Right now, in certain areas and price ranges, it is a seller's market with many properties getting multiple offers. Livermore reports inventory is also at the lowest level in the past two years. Listings declined 4.5% and pending sales were up 6.5%. The market is healthy with most of the activity below $750,000. We still have a high percentage of REO and short sales in Livermore especially in the attached homes (i.e. condos and townhomes). Multiple offers are still common below $600,000. Castro Valley reports an increase in the listings, with people resuming their plans after the holidays.
- Monterey County— 2010 has started off with lots of activity, though most of it is REOs and Short Sales, unlike most years that are slow until into February. As expected for first of year, the listings are coming in quickly and we're seeing lots of price reductions, as sellers are becoming increasingly competitive.
- North Bay—Greenbrae reports it is seeing some multiple offers again in the $700-800K range. Consumers seem to be ready to pull the trigger. We expect more inventory in coming weeks. Open houses are well attended. Southern Marin reports inventory is extremely low but sales are equal to or in Mill Valley’s case more than this time last year. Santa Rosa reported a strong start with open escrows. However, the weather and the shortage of inventory below $400K may slow the tide in the short term.
- Peninsula—Burlingame reports listings are starting to come in and pent up buyers are beginning to get out and make offers. Great listings are being snapped up quickly. We need more inventory. Half Moon Bay reports the market is slow on the coast with low inventory. The sellers are waiting a couple more weeks to market their property. Our Menlo Park-Santa Cruz office reported after a strong finish to 2009, there seems to be a bit of a lull at the start of 2010. Offers are being written, sellers are slow to react. The downtown Palo Alto office reported the market is still slow. We anticipate that after the Super Bowl weekend for things to get quite busy.
- San Francisco— The Lombard office reported the post holiday listing surge has not happened yet. Buyers are out there but agents comment on the lack of inventory. Multiple offers common of late with all cash deals winning out over all others. The Market Street office reported new properties coming to market are selling pretty quickly and most with multiple offers if they don’t take the first one. Serious buyers are coming in to all the open houses especially at the entry level price points. They also are seeing a lot of cash buyers just looking for the right deal. First 2 weeks of 2010 at SF Van Ness seemed lack-luster, but the third week was a huge week of new sales, all price points, with several over $3M.
- Santa Cruz County: New listings are starting to come in as we move closer to February, although inventory levels remain low overall in the county. South County bank-owned properties have drastically reduced the available inventory there with less than 20 active listings in the Watsonville area. We have received a few new REOs in the past 6 weeks and these are being released one or two at a time rather than 10 or 15 or 20. This inventory is definitely being controlled carefully by the banks. The upper end market, over $2 million, remains very slow. Given the current market conditions, and time of year, sales are better than expected for January.
- Silicon Valley: Cupertino reports things are heating up and open houses are wild. Almaden reports low inventory makes it difficult to even find homes to hold open. Over $1.1 million is very slow despite good interest rates. Agents are busy working and beginning to go on listing appointments. I expect our inventory to grow by 50 per week over the next several weeks. Willow Glen reports listings are on the increase. Open houses are somewhat busy as well. Saratoga reported new listings seem to be tracking as expected with the beginning of the year market. Sales seem to be lagging though. Hopefully, it's just a slow start and will pick up steam as the month progresses.
- South County: Morgan Hill reports the new "lament" of the South County Realtor, "so many buyers, so few listings.” With interest rates still very low and prices so attractive, demand is outpacing supply for homes in all price ranges. Well priced and well maintained homes do not stay on the market very long here in South County.
So by and large, it’s pretty much a conversation about inventory when you talk about our Bay Area real estate market. Even the luxury market, while admittedly slower than lower price points, has inventories trending down. Take San Francisco, for example, for homes over $2 million. The luxury market finished out December 2009 with a 6 months supply of inventory – compared to 10 months supply for the same period in 2008. You’ll find similar trends in the high end in many of our communities in Silicon Valley, Peninsula, Marin, and the East Bay. Accuracy in pricing and attention to detail in showing condition remains critical in the luxury markets, but sales activity is picking up and inventories are going down.
Until next time, have a great week!
Rick
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Weekly Market Watch
It’s a New Year…But Is It a New Housing Market?
We’ve all been reading the conflicting headlines. Some say 2010 will have its challenges. Others say 2010 will be the start of good things to come. But what’s the truth? How can we read through the pessimism and for that matter, the rose colored glasses, to determine where we are likely headed?
In 2009, it seemed the only thing that was “certain” regarding the economy, financial markets and real estate in 2009 – was uncertainty.
We’re hoping much of that is behind us, and here I’ll offer my insight and share what I believe the coming year will bring. Together, we’ll weed through the headlines and I’ll offer my best opinion. And a year from now, we’ll look back on this edition of Weekly Market Watch to determine if my hunch was correct or if I should’ve kept my opinions with the rest of the weeds.
• Overall. I think 2010 will be the year we begin to build a solid housing foundation. Many experts are predicting that the recession is nearly complete, if it isn’t already, as measured by a decline in negative growth. But the recovery is going to depend somewhat on stimulus spending (much of which is already approved and unspent) and doing more to facilitate job growth. As CAR Economist Leslie Appleton Young said, “If we don’t create more direct policies to get people back to work, this could go on much longer.”
• Let’s start with foreclosures. No, we are definitely not out of the woods yet. I think we have a lot of work ahead of us and much of that has to do with the state of the overall economy. Unemployment is still high and while I think we’re better, we’re not yet on enough solid ground to be able to say that 2010 will see the end of broad-based job loss. Late in 2009 we’ve seen some consecutive weeks of declining new unemployment claims, which could be a good start. The latest U.S. Bureau of Unemployment Figures show that unemployment rates were higher in November 2009 than for the same period in 2008 in all 372 metropolitan areas. What happens when people lose their jobs? They typically aren’t able to pay their mortgages. There are also many people out there with adjustable rate mortgages which haven’t yet adjusted. When those mortgages adjust, there will be people who will find themselves in a short sale or foreclosure situation, especially if their employment situation is not as favorable as it was when they originated their home loan. Fortunately the good news is that the government is putting more pressure on banks to work with homeowners on modifying their existing loans. There are also some banks who are taking steps to clear the way for a Short Sale approval if a modification request can’t be approved. These programs can help avoid too many foreclosed properties hitting our markets in too short a period of time. There is talk of even more creative programs that could ease the level (or velocity) of foreclosures - which simple Econ 101 tells us is coming.
• Interest rates. There are many schools of thought with relation to the future of interest rates. I tend to agree with economists who believe that last year’s record low interest rates, where some were able to secure a 30 year fixed rate mortgage for under 5%, may be a thing of the past. Do I see them taking a big surge upward in 2010? No, probably not. CNBC Reporter Diana Olick wrote, “Unless the government decides to extend its Fannie-Freddie purchase program or do something else to juice the credit markets, mortgage rates will rise steadily, probably leveling off somewhere around six percent” and I tend to agree with that. Also, from Lawrence Yun, NAR Chief Economist: “The Federal Reserve will slowly start the unwinding of its mortgage-backed security purchases. Also, consumer prices will be watched for any sign of accelerating inflation. Bond investors, therefore, will be cautious about lending at such low rates. The 30-year fixed rate is likely to reach 5.7 percent by the end of 2010 from the current 5.0 percent.” Still a good place to be. But having said that, I encourage you to review my February 2009 Reality Check piece in which I shared how increases in purchasing power can affect a buyer’s purchasing power. I have updated it with the latest numbers and if you are considering buying, you may want to consider doing so before interest rates start making their way up. Even a small hike in rates can dramatically affect your purchasing power.
• Housing Prices and Sales. I tend to agree with the California Association of Realtors price and sales outlook for 2010. They’re calling for a 3.3% increase in median home price. They’re also calling for a 2.3% decline in home sales. I think these are accurate predictions. In the Bay Area we will have pockets that could vary as much as 5% to 8% in either direction – but I will say that we’ll see the Bay Area remain fairly flat with respect to price and units as a whole.
• The hottest market? The entry level market is by and large the hottest segment of the housing market right now and in all honesty, probably will continue to be in 2010. But, it was also the first to experience the downturn so it is certainly easy to suspect that it would be the first to recover. What we know about the entry level market is this:
o Homes saw a great deal of depreciation in this market
o This market was most affected by foreclosures and short sales
o Affordability is especially high in this market
o The inventory is low in the entry level market in many areas
I don’t see much of this changing in 2010.
I do see a trickle-up affect coming from the entry level market into the move-up market. We are beginning to see contingent offers, more and more each week. Some homeowners are able to take advantage of the $6,500 home buyer tax credit as well as the opportunity to cash in on a buyer’s market in the entry level and a seller’s market in the move-up region. It really is a perfect storm for this group and I hope more move-up buyers will consider that. Fortunately, we have our Move-Up Marketer program which helps to educate move-up buyers about the opportunities in today’s market.
The luxury market is a very different market indeed. It was the last to be affected by the market changes and in all likelihood it will be the last to recover. Having said that, there are some very interesting pockets of success. It really depends on the house, the neighborhood and the overall demand for that particular market. We’ve seen instances where a million dollar home comes on the market only to be snatched up within a few days, while others nearby are sitting for over 120 days. It really comes down to location, condition and pricing—no real surprise there! Luxury homes over $2.5M are least affected by interest rates and availability of loans – but can be more largely impacted by movement of the Dow and international economic markets. I would say watch where the Consumer Confidence Index and the DJI is going, and your Luxury market is probably not far behind.
In the end, regardless of what the market may or may not be in the coming year, the bottom line is, it may be a really great time to buy. Attractive interest rates. Increased affordability. Tax credits. In many instances, there hasn’t been a better opportunity to buy in decades. Please don’t lose sight of that. If you are in a position to buy and are considering do so, please do explore your options. I believe 2010 will be a year of creating a solid foundation on which to build. Don’t wait until it has passed by.
Now, let’s take a look at the past two Holiday weeks in local Bay Area real estate:
• East Bay—Berkeley reports we are very low on inventory. We are hoping for a big tour tomorrow with lots of new listings. At our sales meeting yesterday, the agents announced several "coming soons", sellers who had been waiting for 2010. We had a good number of accepted deals at the end of December. The buyers are still out there and a perfect storm of disappearing government credits, hints that the Fed will increase interest rates, and new listings will hopefully get the more reticent buyers off that fence. Castro Valley reports the market is still full of cash buyers, who are leading the market. It seems like everyone has cash, and lots of it. Livermore reports there seems to be a lull in the market, as some of the listings that were garnering multiple offers just 30 days ago are sitting on the market in Livermore. This lull may be an opportunity for buyer to purchase a home without competing offers. Oakland reports one of the busiest Decembers I have ever seen. The agents were frantically working on escrows and our budget was for 27 sales and we had over 40. Average sales price went up for the month. Feeling lot's of buzz. Listings came in right around expectations. Walnut Creek reports very low inventory, most sales are over asking price. We are seeing a few more REO listings coming on market.
• Monterey County—Unlike most years, activity really did not slow down much over the holidays, especially in the lower price ranges. There are still many showings of homes and writing of offers, and we put 30 properties into escrow in the three weeks right around Christmas. Also, in December only 25% of our closed properties were above $1 million, with highest-priced sale at $1.8 million.
• North Bay—Northern Marin reports a closed escrow on a short sale at $199,000 in Novato after 570 Days on Market that was original listed for 235,000. Cash is still winning out on multiple offers in the market place. Inventory is picking up. Southern Marin reports seasonal low sales and listing activity, but agents report new listings coming on the market in the next few weeks. Santa Rosa reports the final two weeks of the decade saw a flurry of closings with strong sales the week before Christmas and a very quiet final week for new escrows. There is an optimistic feeling in the air and a feeling of moving forward.
• Peninsula—Burlingame reported the inventory is down and we are all waiting to see what comes to the market in the next few weeks. Everyone has buyers ready to buy and waiting for the perfect listing to come up. We ratified on 1 home listed at 1,499,000 after one day on the market. The early bird prevailed! Half Moon Bay reported a slow market through the holidays – although buzz is in the air as agents are much more optimistic about 2010 and ready to get to work. Menlo Park Santa Cruz reported inventory is very low. Many listings were sold towards the tail end of the year. Sales in all price ranges seemed to be on the buyer’s radar. We had 3 Atherton sales; $6m, $3.99M, & $3M. Palo Alto Downtown reported the holidays were fairly good to the mid-peninsula. We had a variety of first time homebuyers, as well as some sales in the two to three million dollar range. That was interesting, and hopefully an indication of the new year.
• San Francisco—The Market Street office reported Agents have been diligently working to find properties for our buyers but over the last couple of weeks new inventory has been slow coming to the market. Conference rooms have been busy with agents writing offers on what’s available. Several great listings will be coming to market within the next few weeks to take advantage of the serious buyers in search of a home. The San Francisco Van Ness office reported a fairly strong closing month, despite the holiday season.
• Santa Cruz County— 2009 ended up being the first year since 2004 in SC County that the unit count went up. 14% on closed sales. This is most attributable to the high incidence of REO sales the first half of the year. Inventory level were down from 2008 overall by about 21% which started driving prices up from hitting a low point in March of $460,000. We ended the year with the median price at $550,000 - $35,000 down from December of 2008 in the County.
• Silicon Valley—Cupertino reports it is very slow, as one would expect between Christmas and New Year's. San Jose Almaden reports the local market is a pressure cooker under 1 million. Current REO market is 168 last year at this time was 986. Property north of 1 million will sell if considered being a steal of a deal. Otherwise they sit. San Jose Main reports sales activity has been slow thru the holiday period but we anticipate an increase in listing and sales activity in the upcoming weeks. Interest rates and soft pricing is attracting first time buyers. Most homes up to $550k still seeing multiple offers. San Jose Willow Glen reports we have a lot of new listings. This will certainly give potential buyers a better chance to buy now. Saratoga reports the market seemed to mirror what would be expected for the holiday season.
• South County—Gilroy reports the activity is very slow, as one would expect between Christmas and New Year's. Morgan Hill reported the new year brings renewed optimism for buyers and sellers (and agents). We are seeing an increase in new listings--especially upper-end properties. More importantly, buyer demand remains high as potential buyers are still seeking bargains for entry level homes. The South County remains one of the best areas for first time home buyers and investors. The average sales price for a home sold in the Morgan Hill Office was about $427,000--well below our neighbors to the North. Good interest rates and the tax credit see to be prime motivators for buyers to secure and close a home before June.
A quick synopsis of the above shows that about ½ of the offices reported Holiday slowdown, while offices such as Oakland, Santa Rosa, SF Van Ness, the Menlo Park offices, and Palo Alto felt that late December was very busy considering the Holidays. I can say that spending time in several offices this past week – it certainly seems to be one of the busiest first weeks of the New Year that I’ve seen in some time.
Until next week- Very Best,
Rick
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
We’ve all been reading the conflicting headlines. Some say 2010 will have its challenges. Others say 2010 will be the start of good things to come. But what’s the truth? How can we read through the pessimism and for that matter, the rose colored glasses, to determine where we are likely headed?
In 2009, it seemed the only thing that was “certain” regarding the economy, financial markets and real estate in 2009 – was uncertainty.
We’re hoping much of that is behind us, and here I’ll offer my insight and share what I believe the coming year will bring. Together, we’ll weed through the headlines and I’ll offer my best opinion. And a year from now, we’ll look back on this edition of Weekly Market Watch to determine if my hunch was correct or if I should’ve kept my opinions with the rest of the weeds.
• Overall. I think 2010 will be the year we begin to build a solid housing foundation. Many experts are predicting that the recession is nearly complete, if it isn’t already, as measured by a decline in negative growth. But the recovery is going to depend somewhat on stimulus spending (much of which is already approved and unspent) and doing more to facilitate job growth. As CAR Economist Leslie Appleton Young said, “If we don’t create more direct policies to get people back to work, this could go on much longer.”
• Let’s start with foreclosures. No, we are definitely not out of the woods yet. I think we have a lot of work ahead of us and much of that has to do with the state of the overall economy. Unemployment is still high and while I think we’re better, we’re not yet on enough solid ground to be able to say that 2010 will see the end of broad-based job loss. Late in 2009 we’ve seen some consecutive weeks of declining new unemployment claims, which could be a good start. The latest U.S. Bureau of Unemployment Figures show that unemployment rates were higher in November 2009 than for the same period in 2008 in all 372 metropolitan areas. What happens when people lose their jobs? They typically aren’t able to pay their mortgages. There are also many people out there with adjustable rate mortgages which haven’t yet adjusted. When those mortgages adjust, there will be people who will find themselves in a short sale or foreclosure situation, especially if their employment situation is not as favorable as it was when they originated their home loan. Fortunately the good news is that the government is putting more pressure on banks to work with homeowners on modifying their existing loans. There are also some banks who are taking steps to clear the way for a Short Sale approval if a modification request can’t be approved. These programs can help avoid too many foreclosed properties hitting our markets in too short a period of time. There is talk of even more creative programs that could ease the level (or velocity) of foreclosures - which simple Econ 101 tells us is coming.
• Interest rates. There are many schools of thought with relation to the future of interest rates. I tend to agree with economists who believe that last year’s record low interest rates, where some were able to secure a 30 year fixed rate mortgage for under 5%, may be a thing of the past. Do I see them taking a big surge upward in 2010? No, probably not. CNBC Reporter Diana Olick wrote, “Unless the government decides to extend its Fannie-Freddie purchase program or do something else to juice the credit markets, mortgage rates will rise steadily, probably leveling off somewhere around six percent” and I tend to agree with that. Also, from Lawrence Yun, NAR Chief Economist: “The Federal Reserve will slowly start the unwinding of its mortgage-backed security purchases. Also, consumer prices will be watched for any sign of accelerating inflation. Bond investors, therefore, will be cautious about lending at such low rates. The 30-year fixed rate is likely to reach 5.7 percent by the end of 2010 from the current 5.0 percent.” Still a good place to be. But having said that, I encourage you to review my February 2009 Reality Check piece in which I shared how increases in purchasing power can affect a buyer’s purchasing power. I have updated it with the latest numbers and if you are considering buying, you may want to consider doing so before interest rates start making their way up. Even a small hike in rates can dramatically affect your purchasing power.
• Housing Prices and Sales. I tend to agree with the California Association of Realtors price and sales outlook for 2010. They’re calling for a 3.3% increase in median home price. They’re also calling for a 2.3% decline in home sales. I think these are accurate predictions. In the Bay Area we will have pockets that could vary as much as 5% to 8% in either direction – but I will say that we’ll see the Bay Area remain fairly flat with respect to price and units as a whole.
• The hottest market? The entry level market is by and large the hottest segment of the housing market right now and in all honesty, probably will continue to be in 2010. But, it was also the first to experience the downturn so it is certainly easy to suspect that it would be the first to recover. What we know about the entry level market is this:
o Homes saw a great deal of depreciation in this market
o This market was most affected by foreclosures and short sales
o Affordability is especially high in this market
o The inventory is low in the entry level market in many areas
I don’t see much of this changing in 2010.
I do see a trickle-up affect coming from the entry level market into the move-up market. We are beginning to see contingent offers, more and more each week. Some homeowners are able to take advantage of the $6,500 home buyer tax credit as well as the opportunity to cash in on a buyer’s market in the entry level and a seller’s market in the move-up region. It really is a perfect storm for this group and I hope more move-up buyers will consider that. Fortunately, we have our Move-Up Marketer program which helps to educate move-up buyers about the opportunities in today’s market.
The luxury market is a very different market indeed. It was the last to be affected by the market changes and in all likelihood it will be the last to recover. Having said that, there are some very interesting pockets of success. It really depends on the house, the neighborhood and the overall demand for that particular market. We’ve seen instances where a million dollar home comes on the market only to be snatched up within a few days, while others nearby are sitting for over 120 days. It really comes down to location, condition and pricing—no real surprise there! Luxury homes over $2.5M are least affected by interest rates and availability of loans – but can be more largely impacted by movement of the Dow and international economic markets. I would say watch where the Consumer Confidence Index and the DJI is going, and your Luxury market is probably not far behind.
In the end, regardless of what the market may or may not be in the coming year, the bottom line is, it may be a really great time to buy. Attractive interest rates. Increased affordability. Tax credits. In many instances, there hasn’t been a better opportunity to buy in decades. Please don’t lose sight of that. If you are in a position to buy and are considering do so, please do explore your options. I believe 2010 will be a year of creating a solid foundation on which to build. Don’t wait until it has passed by.
Now, let’s take a look at the past two Holiday weeks in local Bay Area real estate:
• East Bay—Berkeley reports we are very low on inventory. We are hoping for a big tour tomorrow with lots of new listings. At our sales meeting yesterday, the agents announced several "coming soons", sellers who had been waiting for 2010. We had a good number of accepted deals at the end of December. The buyers are still out there and a perfect storm of disappearing government credits, hints that the Fed will increase interest rates, and new listings will hopefully get the more reticent buyers off that fence. Castro Valley reports the market is still full of cash buyers, who are leading the market. It seems like everyone has cash, and lots of it. Livermore reports there seems to be a lull in the market, as some of the listings that were garnering multiple offers just 30 days ago are sitting on the market in Livermore. This lull may be an opportunity for buyer to purchase a home without competing offers. Oakland reports one of the busiest Decembers I have ever seen. The agents were frantically working on escrows and our budget was for 27 sales and we had over 40. Average sales price went up for the month. Feeling lot's of buzz. Listings came in right around expectations. Walnut Creek reports very low inventory, most sales are over asking price. We are seeing a few more REO listings coming on market.
• Monterey County—Unlike most years, activity really did not slow down much over the holidays, especially in the lower price ranges. There are still many showings of homes and writing of offers, and we put 30 properties into escrow in the three weeks right around Christmas. Also, in December only 25% of our closed properties were above $1 million, with highest-priced sale at $1.8 million.
• North Bay—Northern Marin reports a closed escrow on a short sale at $199,000 in Novato after 570 Days on Market that was original listed for 235,000. Cash is still winning out on multiple offers in the market place. Inventory is picking up. Southern Marin reports seasonal low sales and listing activity, but agents report new listings coming on the market in the next few weeks. Santa Rosa reports the final two weeks of the decade saw a flurry of closings with strong sales the week before Christmas and a very quiet final week for new escrows. There is an optimistic feeling in the air and a feeling of moving forward.
• Peninsula—Burlingame reported the inventory is down and we are all waiting to see what comes to the market in the next few weeks. Everyone has buyers ready to buy and waiting for the perfect listing to come up. We ratified on 1 home listed at 1,499,000 after one day on the market. The early bird prevailed! Half Moon Bay reported a slow market through the holidays – although buzz is in the air as agents are much more optimistic about 2010 and ready to get to work. Menlo Park Santa Cruz reported inventory is very low. Many listings were sold towards the tail end of the year. Sales in all price ranges seemed to be on the buyer’s radar. We had 3 Atherton sales; $6m, $3.99M, & $3M. Palo Alto Downtown reported the holidays were fairly good to the mid-peninsula. We had a variety of first time homebuyers, as well as some sales in the two to three million dollar range. That was interesting, and hopefully an indication of the new year.
• San Francisco—The Market Street office reported Agents have been diligently working to find properties for our buyers but over the last couple of weeks new inventory has been slow coming to the market. Conference rooms have been busy with agents writing offers on what’s available. Several great listings will be coming to market within the next few weeks to take advantage of the serious buyers in search of a home. The San Francisco Van Ness office reported a fairly strong closing month, despite the holiday season.
• Santa Cruz County— 2009 ended up being the first year since 2004 in SC County that the unit count went up. 14% on closed sales. This is most attributable to the high incidence of REO sales the first half of the year. Inventory level were down from 2008 overall by about 21% which started driving prices up from hitting a low point in March of $460,000. We ended the year with the median price at $550,000 - $35,000 down from December of 2008 in the County.
• Silicon Valley—Cupertino reports it is very slow, as one would expect between Christmas and New Year's. San Jose Almaden reports the local market is a pressure cooker under 1 million. Current REO market is 168 last year at this time was 986. Property north of 1 million will sell if considered being a steal of a deal. Otherwise they sit. San Jose Main reports sales activity has been slow thru the holiday period but we anticipate an increase in listing and sales activity in the upcoming weeks. Interest rates and soft pricing is attracting first time buyers. Most homes up to $550k still seeing multiple offers. San Jose Willow Glen reports we have a lot of new listings. This will certainly give potential buyers a better chance to buy now. Saratoga reports the market seemed to mirror what would be expected for the holiday season.
• South County—Gilroy reports the activity is very slow, as one would expect between Christmas and New Year's. Morgan Hill reported the new year brings renewed optimism for buyers and sellers (and agents). We are seeing an increase in new listings--especially upper-end properties. More importantly, buyer demand remains high as potential buyers are still seeking bargains for entry level homes. The South County remains one of the best areas for first time home buyers and investors. The average sales price for a home sold in the Morgan Hill Office was about $427,000--well below our neighbors to the North. Good interest rates and the tax credit see to be prime motivators for buyers to secure and close a home before June.
A quick synopsis of the above shows that about ½ of the offices reported Holiday slowdown, while offices such as Oakland, Santa Rosa, SF Van Ness, the Menlo Park offices, and Palo Alto felt that late December was very busy considering the Holidays. I can say that spending time in several offices this past week – it certainly seems to be one of the busiest first weeks of the New Year that I’ve seen in some time.
Until next week- Very Best,
Rick
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Sunday, December 27, 2009
Weekly Market Watch
Happy Holidays and a Look Ahead
Welcome to our final edition of Weekly Market Watch for the year. What a ride 2009 has been. It will be interesting to look back at this edition of Weekly Market Watch a year from now to see how things have changed. Will we be out of the woods then? Will these tough economic times be a thing of the past? I believe 2010 will provide many opportunities for buyers and sellers of Bay Area real estate, and as Realtors, we can be assured of being very busy if we remain focused.
I know most of us are out finishing our holiday shopping and getting into full holiday swing so I’ll keep my last Weekly Market Watch of the year short and sweet. I came across a really good article in BusinessWeek this week and it had some very interesting images and graphics that I think help effectively tell the story of today’s market.
Following are excerpts from the BusinessWeek article entitled “A Housing Recovery Could Solidify.”
“Residential real estate prices have increased by about 5%, adjusted for inflation, since the end of the first quarter. As the inventory of existing homes for sale shrinks, a housing recovery could solidify. Sales have increased sharply in some of the hardest-hit states.
In Most of America, Home Prices Creep Up - A Lost Decade
Although home prices have been rising since March, after adjusting for inflation they are only at levels first reached in 2001.
Fewer New-Home Sales
Existing homes now make up about 93% of all sales, vs. a long-term historical average of about 85%.
Signs of Life in the Sunbelt—and Elsewhere
Four states—Nevada, Arizona, Florida, and California—have seen double-digit increases in sales volumes for existing homes since the end of 2008.”
So what does this mean and more importantly, the question of the day from so many of you is, what’s next? Well here’s what I think. While we probably are not out of the woods yet, housing is showing signs of stability, markets are showing signs of rational behavior and everyone is starting to understand the fundamental problems that brought us here. I think the combination of those have us on the right path. Are we going to suddenly see double digit appreciation in 2010? Probably not. But I think we are on a good, sustainable path that should give us some modest growth in the coming year, largely in the most sought after affordable and mid-level markets. In terms of the luxury market, I think only time will tell. It was the last to feel the downturn and in all likelihood it will be the last to recover. Knowing this, it is important to point out that there are always pockets that are the exception. Real estate is local and there are always going to be those sought after neighborhoods, those one-of-a-kind properties that just demand something different. With that said, I am pleased to say that just within the past three weeks, our local CB offices have closed an impressive number of transactions in the high end – over 15 properties closed in the $3M -$6M range, from Mill Valley in the north to San Jose in the south – plus two properties, each over $12M in Woodside and Atherton. Our inventory for desirable high end properties is surprisingly low, and it’s hard to predict what the New Year will bring. What I can assure you is that over the next year I’ll be watching the market closely and will keep you abreast of changes as they happen.
And with that said, let’s take a look at this week in real estate:
• East Bay--Berkeley reports buyers are out there and open homes are well attended. A good percentage of buyers want to buy before the end of the year and many are all cash at all price points. Castro Valley reports there are lots and lots of cash buyers. At least one in three of all offers we are receiving are cash buyers, which is amazing, since we are talking about offers in the middle price ranges in addition to the entry level markets. We have definitely slowed down as Christmas approaches, yet listings are still trickling in and we continue to show properties even as we approach the holidays. Danville reports we are definitely in the holiday slow down, although we had 2 sales in the million dollar range this week. Livermore reports an interesting trend: Since January 1. 2009 through November 2009 the inventory of active detached homes in Livermore has decreased by 52% while the average sale price has remained stable. In looking at November 2008 to November 2009, the average sales price is up almost 4% in Livermore. In Livermore, we are still seeing a lot of multiple offers due to the lack of inventory and an abundance of buyers. Bottom line, we need more listings! Orinda reports that inventory is down due to the holidays. Buyers are still out there and prices on remaining inventory remain stable.
• Monterey County--Market seems to continue to be active-- more so than usual for the end of the year. Amazing number of offers still being written, at amazingly low prices that we thought we'd never see again. Last week we closed on a property at $100,000 and also five properties between 1.2 and 2.1 million.
• North Bay--Greenbrae reports lots of activity this month in the $1.5-$2.5 million range. Agents who are looking ahead to 2010 are working with serious buyers and serious sellers. While deals may not be pretty next year we are expecting a increase in number of sales. Northern Marin reports we are still experiencing multiple offers in the entry level price range of 250,000 to 450,000. We had five offers on a million dollar home as well. Inventory is lower than usual for December. Banks continue to slow down transactions with unusual conditions to fund loans. Sebastopol reports the market is very quiet! Agents are writing lots of offers on limited inventory. Cash remains king and we are seeing more multiple cash offers. Santa Rosa reports open house attendance is now very low, but those who show up are serious. Open escrows are up just a bit as last minute shoppers close out the year.
• Peninsula--Half Moon Bay reports we have experienced a real slow down this December in sales activity, listing activity and open house attendance. Menlo Park El Camino reports we had eight offers on a listing that was $899 in Menlo Park Open houses were not bad and Agents seemed to think that the buyers’ general state of mind regarding buying was positive. Little of the old comments ‘Prices are going to go down more’ and more of “We think Q1 is the right time to buy.” The only stall will be fear generated by more and more political discussion of the massive US debt. Palo Alto Downtown reports as anticipated, the holiday season has started – meaning inventory is low. Although a bit surprising, we have had a percentage of properties that have sold from $2M and up. So those buyers are still out there. Certainly the entry level market, if you have inventory, is very, very strong – anything below $1.4M/$1.5M in Palo Alto is extremely strong.
• San Francisco--Lombard reports a very slow start to December, but no consistency in traffic. We had two people through one house, 80 through another; a solo-offer deal well under asking to 13 offers on an entry fixer, well over. Some Agents working hard through the holidays, others withdrawing listings until 2nd week of January. Market Street reports that we are not seeing many multiple offers being received these last couple of weeks. Activity has slowed down at open houses and broker’s tour. We still have several buyers with cash that are looking for a home to call their own by year’s end but inventory has slowed down with the coming holiday season. Noriega reports the market is very slow, but still a lot of activities on the entry level. One REO listing in Daly City had over 120 people in a two hour span during open house. Same property received multiple offers, with several over asking, all cash. Van Ness reports that it closed 18 deals from 12/9-12/15.
• Santa Cruz County--Typical seasonal slow down with the holidays right around the corner. Agent activity including open house activity is minimal at this point in the year with many leaving town for the holidays. Inventory is down about 30% from last year at this time. REOs in south county (Watsonville) are continuing to draw multiple offers with many cash buyers - it is driving prices up slightly. Prices are about the same as they were a year ago overall, except in the high end where it seems to continue to drop.
• Silicon Valley--Cupertino reports it is remarkably busy for this time of year! Los Altos reports the market is still active. Buyers are coming to open houses and looking for the right opportunity. Multiple offers of 13 on one $500K fixer, and five offers on a modest $1.2M property with "potential.” San Jose Almaden reports a seasonal slow down but more than ever agents are working through the holidays. San Jose Willow Glen reports it has slowed down quite a bit due to the holiday season. Saratoga reports there seems to be a sudden increase in listing activity. I think that many agents are listing properties to prepare them to onto the market in early 2010. Although the previews market is slow a number of my agents are working on sizable transactions and I'm hopeful this area will open a bit in 2010.
I’d like to take this opportunity to wish all of you the very best of the Holiday season. I also want to add my thanks and congratulations to all who made our Food Bank drive for local Food Banks a huge success. Final numbers will be complete early next week, but I know that we beat our goal of $10,000 – so with the Coldwell Banker match, we will be giving more than $20,000 to your local Food Banks. Thanks again – you have shown that you are not only great professionals, but caring and compassionate as well.
See you in 2010!
Rick
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Welcome to our final edition of Weekly Market Watch for the year. What a ride 2009 has been. It will be interesting to look back at this edition of Weekly Market Watch a year from now to see how things have changed. Will we be out of the woods then? Will these tough economic times be a thing of the past? I believe 2010 will provide many opportunities for buyers and sellers of Bay Area real estate, and as Realtors, we can be assured of being very busy if we remain focused.
I know most of us are out finishing our holiday shopping and getting into full holiday swing so I’ll keep my last Weekly Market Watch of the year short and sweet. I came across a really good article in BusinessWeek this week and it had some very interesting images and graphics that I think help effectively tell the story of today’s market.
Following are excerpts from the BusinessWeek article entitled “A Housing Recovery Could Solidify.”
“Residential real estate prices have increased by about 5%, adjusted for inflation, since the end of the first quarter. As the inventory of existing homes for sale shrinks, a housing recovery could solidify. Sales have increased sharply in some of the hardest-hit states.
In Most of America, Home Prices Creep Up - A Lost Decade
Although home prices have been rising since March, after adjusting for inflation they are only at levels first reached in 2001.
Fewer New-Home Sales
Existing homes now make up about 93% of all sales, vs. a long-term historical average of about 85%.
Signs of Life in the Sunbelt—and Elsewhere
Four states—Nevada, Arizona, Florida, and California—have seen double-digit increases in sales volumes for existing homes since the end of 2008.”
So what does this mean and more importantly, the question of the day from so many of you is, what’s next? Well here’s what I think. While we probably are not out of the woods yet, housing is showing signs of stability, markets are showing signs of rational behavior and everyone is starting to understand the fundamental problems that brought us here. I think the combination of those have us on the right path. Are we going to suddenly see double digit appreciation in 2010? Probably not. But I think we are on a good, sustainable path that should give us some modest growth in the coming year, largely in the most sought after affordable and mid-level markets. In terms of the luxury market, I think only time will tell. It was the last to feel the downturn and in all likelihood it will be the last to recover. Knowing this, it is important to point out that there are always pockets that are the exception. Real estate is local and there are always going to be those sought after neighborhoods, those one-of-a-kind properties that just demand something different. With that said, I am pleased to say that just within the past three weeks, our local CB offices have closed an impressive number of transactions in the high end – over 15 properties closed in the $3M -$6M range, from Mill Valley in the north to San Jose in the south – plus two properties, each over $12M in Woodside and Atherton. Our inventory for desirable high end properties is surprisingly low, and it’s hard to predict what the New Year will bring. What I can assure you is that over the next year I’ll be watching the market closely and will keep you abreast of changes as they happen.
And with that said, let’s take a look at this week in real estate:
• East Bay--Berkeley reports buyers are out there and open homes are well attended. A good percentage of buyers want to buy before the end of the year and many are all cash at all price points. Castro Valley reports there are lots and lots of cash buyers. At least one in three of all offers we are receiving are cash buyers, which is amazing, since we are talking about offers in the middle price ranges in addition to the entry level markets. We have definitely slowed down as Christmas approaches, yet listings are still trickling in and we continue to show properties even as we approach the holidays. Danville reports we are definitely in the holiday slow down, although we had 2 sales in the million dollar range this week. Livermore reports an interesting trend: Since January 1. 2009 through November 2009 the inventory of active detached homes in Livermore has decreased by 52% while the average sale price has remained stable. In looking at November 2008 to November 2009, the average sales price is up almost 4% in Livermore. In Livermore, we are still seeing a lot of multiple offers due to the lack of inventory and an abundance of buyers. Bottom line, we need more listings! Orinda reports that inventory is down due to the holidays. Buyers are still out there and prices on remaining inventory remain stable.
• Monterey County--Market seems to continue to be active-- more so than usual for the end of the year. Amazing number of offers still being written, at amazingly low prices that we thought we'd never see again. Last week we closed on a property at $100,000 and also five properties between 1.2 and 2.1 million.
• North Bay--Greenbrae reports lots of activity this month in the $1.5-$2.5 million range. Agents who are looking ahead to 2010 are working with serious buyers and serious sellers. While deals may not be pretty next year we are expecting a increase in number of sales. Northern Marin reports we are still experiencing multiple offers in the entry level price range of 250,000 to 450,000. We had five offers on a million dollar home as well. Inventory is lower than usual for December. Banks continue to slow down transactions with unusual conditions to fund loans. Sebastopol reports the market is very quiet! Agents are writing lots of offers on limited inventory. Cash remains king and we are seeing more multiple cash offers. Santa Rosa reports open house attendance is now very low, but those who show up are serious. Open escrows are up just a bit as last minute shoppers close out the year.
• Peninsula--Half Moon Bay reports we have experienced a real slow down this December in sales activity, listing activity and open house attendance. Menlo Park El Camino reports we had eight offers on a listing that was $899 in Menlo Park Open houses were not bad and Agents seemed to think that the buyers’ general state of mind regarding buying was positive. Little of the old comments ‘Prices are going to go down more’ and more of “We think Q1 is the right time to buy.” The only stall will be fear generated by more and more political discussion of the massive US debt. Palo Alto Downtown reports as anticipated, the holiday season has started – meaning inventory is low. Although a bit surprising, we have had a percentage of properties that have sold from $2M and up. So those buyers are still out there. Certainly the entry level market, if you have inventory, is very, very strong – anything below $1.4M/$1.5M in Palo Alto is extremely strong.
• San Francisco--Lombard reports a very slow start to December, but no consistency in traffic. We had two people through one house, 80 through another; a solo-offer deal well under asking to 13 offers on an entry fixer, well over. Some Agents working hard through the holidays, others withdrawing listings until 2nd week of January. Market Street reports that we are not seeing many multiple offers being received these last couple of weeks. Activity has slowed down at open houses and broker’s tour. We still have several buyers with cash that are looking for a home to call their own by year’s end but inventory has slowed down with the coming holiday season. Noriega reports the market is very slow, but still a lot of activities on the entry level. One REO listing in Daly City had over 120 people in a two hour span during open house. Same property received multiple offers, with several over asking, all cash. Van Ness reports that it closed 18 deals from 12/9-12/15.
• Santa Cruz County--Typical seasonal slow down with the holidays right around the corner. Agent activity including open house activity is minimal at this point in the year with many leaving town for the holidays. Inventory is down about 30% from last year at this time. REOs in south county (Watsonville) are continuing to draw multiple offers with many cash buyers - it is driving prices up slightly. Prices are about the same as they were a year ago overall, except in the high end where it seems to continue to drop.
• Silicon Valley--Cupertino reports it is remarkably busy for this time of year! Los Altos reports the market is still active. Buyers are coming to open houses and looking for the right opportunity. Multiple offers of 13 on one $500K fixer, and five offers on a modest $1.2M property with "potential.” San Jose Almaden reports a seasonal slow down but more than ever agents are working through the holidays. San Jose Willow Glen reports it has slowed down quite a bit due to the holiday season. Saratoga reports there seems to be a sudden increase in listing activity. I think that many agents are listing properties to prepare them to onto the market in early 2010. Although the previews market is slow a number of my agents are working on sizable transactions and I'm hopeful this area will open a bit in 2010.
I’d like to take this opportunity to wish all of you the very best of the Holiday season. I also want to add my thanks and congratulations to all who made our Food Bank drive for local Food Banks a huge success. Final numbers will be complete early next week, but I know that we beat our goal of $10,000 – so with the Coldwell Banker match, we will be giving more than $20,000 to your local Food Banks. Thanks again – you have shown that you are not only great professionals, but caring and compassionate as well.
See you in 2010!
Rick
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Weekly Market Watch
Some good news was released this week from Fannie and Freddie: maximum loan limits will remain unchanged for 2010. The Federal Housing Finance Agency announced that the maximum conforming loan limits for mortgages originated in 2010 will remain unchanged from their 2009 numbers. The maximum loan limits for counties across the United States can be found on the Fannie Mae website.
The news in the media over the last two weeks has largely been about the potential benefits of the new expanded and extended home buyer tax credit which opens the doors for existing homeowners to take advantage of a $6,500 tax credit. There have certainly been quite a few articles regarding the tax credit over the last two weeks. I did come across an interesting article on Reuters.com which stated, “Up to 400,000 people bought a home for the first time due to the credit, boosting first-time buyers to a record 47 percent of sales over the past year, the National Association of Realtors has said. With the help of the credit, existing home sales will rise 2 percent this year and 13.6 in 2010, the group estimates.”
2009 was a challenging year in real estate. The good news is that we started to see a positive turn in the housing market as the year wore on, thanks in part to the first-time home buyer stimulus and indications that the economy was starting to improve. So what will 2010 bring?
With the increases we are seeing in the S&P 500 (up 20.5% YTD) and the economic improvements we are seeing on a global scale, things seem to be moving in the right direction. This makes prospective home buyers feel more confident about their future and the home they may choose to buy. So much of our business is affected by consumer confidence.
But I would caution that we probably aren’t out of the woods as it relates to foreclosures. With unemployment figures still frighteningly high, there are still quite a few homeowners out there who are struggling with their payments. And now there is a great deal of evidence that it isn’t just in the entry level arena; it is also hitting the mid-level and luxury market, too.
The big question remains: When will the “shadow” inventory of already foreclosed homes begin to be released, now that the government has lifted the moratoriums on foreclosures. Once we start to move through those properties, we should begin to see a better, more solid grounding for the real estate market.
The fact is, we live in one of the most desirable regions in the world. Certainly we’ve taken our fair share of hits over the last three years, but our region’s desirability, economic vitality, culture, weather and overall market conditions make it a sought-after place to live. We generally have a much healthier economy in the Bay Area. In terms of a US housing recovery, predicted to be slow, long, and modest; ours will probably be more favorable than most. Here’s an excerpt from a recent Wall Street Journal article on Atherton, which reminds us that real estate is very local, and home prices are very relative to that particular locale and economy.
“Only 60 home sales were completed in Atherton between January and the end of September, down from 70 in the same period in 2008, according to data tracker DataQuick. Median home prices also plunged to $2.78 million during that time from $4.15 million a year earlier. But behind that slowdown there has been more activity than meets the eye. Since May, Silicon Valley-ites have jumped back into the Atherton market, lured by the lower prices. Of the dozen or so Atherton homes sold for more than $5 million this year, 10 were completed in May or after, according DataQuick's analysis of public records. Last month, one newly built home sold for around $14 million.”
As we track Bay Area sales activity, we are seeing more encouraging signs. Based on what we’re seeing, we’re estimating that we can expect sales to moderate to a more sustainable pace. We are already seeing a rise in housing prices in the entry level, and may see a modest rise in our mid-level price points, and most likely we’ll see further adjustments downward in the high end. But this new normal is much more sustainable and will provide a solid foundation to build upon. It makes me excited about the future and gives us all hope for a productive and healthy 2010.
Now, let’s take a look at this week in real estate:
• East Bay—Berkeley buyers are difficult to read. One would assume the low interest rates and credits in favor of the buyer would move people off the fence. Agents are reporting that buyers are still waffling about writing offers, backing out in the face of multiple offers, or over offering and then coming back to sellers for credits or sales price reductions. Once in contract, loans and appraisals continue to slow the process or prevent a close. One deal was postponed because the buyer bought down the loan, thereby changing the rate just enough to trigger the mandatory delay of close. Fremont reported inventory is extraordinarily low. Most properties hitting the market are selling fast some with multiple offers. The buying pool is highly competitive. Livermore reported persistence is the name of the game on short sales. Oakland reported buyers like the new lower interest rates but finding the right property takes time. Still seeing multiple offers on well priced listings. We had 14 offers on a property listed for $1.5M in Pleasanton. Orinda and Danville both report low inventory, as does Walnut Creek –however agents in Walnut Creek are encouraged by two recent sales over $1M.
• Monterey County—We are beginning to receive a few more REO properties in last couple of weeks, as lenders have told us for weeks to expect. Agents continue to show properties, write offers at steady pace, and feel hopeful that the extension of the new home buyer credit of $8000 and the move-up buyer credit of $6500 and, even more importantly, the extension of the conforming rate to $729,750 for our area, will help boost our sales through next Spring at least.
• North Bay—Greenbrae reported one deal had recorded and the bank asked for funds to be returned because they found additional requirements for the buyer. SCARY! Buyers and sellers continue to negotiate deals once a price has been agreed to. Stubborn buyers + sellers= more deals falling apart. Agents must work around egos and emotions to get their clients what they want. Southern Marin reported the lower end is alive and well. Our office listed a fixer in Larkspur for $628K and received 4 offers while a property in Mill Valley, a foreclosure, listed at $728,000 received 10 offers. Petaluma reported multiple offers continue to be the norm under $500,000. We are seeing movement in the $600,000-$900,000 range. Inventory is scarce. Sebastopol reports lack of low end inventory is hurting sales. New properties held open this past weekend drew large crowds. Santa Rosa says lots of entry level transactions are coming together in spite of the low inventory. They are bringing on Previews listings and writing offers in the higher end –but finding negotiations very tough.
• Peninsula—Burlingame reports the inventory is continuing to shrink as buyers are becoming more willing to make offers. No one wants to over pay and counters go on 6 or 7 times but at least the will to make a deal is out there. The smart buyers see what is happening and fear a buyer’s market looming if there is no more inventory coming to the market. Q 4 is a great opportunity. Half Moon Bay reports still good activity for the under $1m range. Open house activity brings 12-15 groups through; which is considered good for the coast. Menlo Park El Camino reported the market is slow. Agents are getting really picky about taking over priced listings. The high end ($4 m plus) is very shaky and buyers are sitting on the sidelines waiting for the other higher priced shoe to drop. It feels like springtime is going to be a flood of listings (and hopefully some pent up buyers). Redwood City reports there seems to be more activity at the open houses. Agents have several buyers but there still seems to be a lack of good inventory. Buyers are watching for price adjustments and when they occur there are usually multiple offers but only two or three. Palo Alto reported that this is a very unusual market. One property could be hot, we presented an offer on a property a little over a million – there were over 30 offers. And yet around the corner, another property priced around a million received no offers.
• San Francisco—Lakeside reported less inventory than last year at this time yet more units have been sold. Lombard reported the reality of today’s market: most deals need lots of attention and tweaking and face lender problems. The good news: activity in the mid and upper markets. Average price point is rising. Market Street reports Agents are still busy writing offers, they are ratifying and some are not. For those who have not yet ratified, their buyers are persistently looking for homes to call their own by the end of the year. Still great traffic at open homes throughout the city. Noriega reported transactions are taking much longer to close, especially with financing involved. Typical deals with financing are taking at least 60 days to close. Van Ness shared some great news: we closed 44 deals during this period.
• Santa Cruz County—Market activity this week is winding down as the holiday nears. Inventory levels overall are extremely low and the under $500K market continues to draw multiple offers with cash being the deciding factor most of the time. The south county market - Watsonville has very little inventory. REO properties which we were listing are now dribbling in. The agents seem to be doing well with short sales, although the timeframes are long and if the client's expectations are not managed from the beginning, they lose interest.
• Silicon Valley—Cupertino reported it is very competitive in the lower price ranges. Short sales continue to be a major segment of the market. Los Altos reported the market is still active on well priced new listings under $2M. Some multiple offers are still coming in below asking, and most above asking by 5-10%. Willow Glen reported we have slowed down but still sales are coming in. Open houses are pretty slow though floor calls are still coming in meaning that there are interested buyers. Los Gatos and Saratoga say things are active in lower price points, while each of the offices have turned in a sale in the $4M range.
• South County—Hollister reported inventory is still low. Buyers are excited that the tax credit has been extended. Multiple offers continue on most listings under $400K. Cash buyers still prevail. Short sale listings are increasing. Morgan Hill reported all of us were very thankful that the first time home buyers tax credit was extended. That fact, accompanied by the $8000 tax credit for "move-up" buyers, provided even more encouragement that the housing market is on the road to recovery. The South County market is beginning to "seasonally" adjust--less activity at open houses and fewer consummated sales. In retrospect, however, many of our agents will end the year with solid production numbers.
I’ll leave you with a few interesting articles of note from the week:
• Cheaper Prices—More Than Tax Credit—Motivating Home Buyers; U.S. News and World Report
• Tax Credit Expands Home Buyer, Economic Opportunities; On Pace To Help 70% Of Potential Home Buyers; RISMedia
• Housing Cooled In October; Tax Credit Extension Expected To Drive Improvements; RISMedia
• Real Estate Outlook: Moving Towards Recovery; Realty Times
• And a local story regarding positive effects of Extended and Expanded Tax Credits http://www.insidebayarea.com/real-estate-news/ci_13801683
Finally, I’d like to take this opportunity to wish you and your families a very warm and blessed Thanksgiving. Despite the challenges in the market and the bumpy road we have taken to get here, we all have a great deal to be thankful for. Family. Friends. Health. Food. A roof over our heads. These are all things to hold close and cherish this special time of year. I for one am thankful for you and appreciate what you do each and every day. I feel very fortunate to be President of Coldwell Banker San Francisco Bay Area and am proud to be leading our excellent team into 2010.
Happy Thanksgiving! Please enjoy the time with your family and friends and we’ll return the week of the 30th with another edition of Weekly Market Watch.
Warm regards,
Rick
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
The news in the media over the last two weeks has largely been about the potential benefits of the new expanded and extended home buyer tax credit which opens the doors for existing homeowners to take advantage of a $6,500 tax credit. There have certainly been quite a few articles regarding the tax credit over the last two weeks. I did come across an interesting article on Reuters.com which stated, “Up to 400,000 people bought a home for the first time due to the credit, boosting first-time buyers to a record 47 percent of sales over the past year, the National Association of Realtors has said. With the help of the credit, existing home sales will rise 2 percent this year and 13.6 in 2010, the group estimates.”
2009 was a challenging year in real estate. The good news is that we started to see a positive turn in the housing market as the year wore on, thanks in part to the first-time home buyer stimulus and indications that the economy was starting to improve. So what will 2010 bring?
With the increases we are seeing in the S&P 500 (up 20.5% YTD) and the economic improvements we are seeing on a global scale, things seem to be moving in the right direction. This makes prospective home buyers feel more confident about their future and the home they may choose to buy. So much of our business is affected by consumer confidence.
But I would caution that we probably aren’t out of the woods as it relates to foreclosures. With unemployment figures still frighteningly high, there are still quite a few homeowners out there who are struggling with their payments. And now there is a great deal of evidence that it isn’t just in the entry level arena; it is also hitting the mid-level and luxury market, too.
The big question remains: When will the “shadow” inventory of already foreclosed homes begin to be released, now that the government has lifted the moratoriums on foreclosures. Once we start to move through those properties, we should begin to see a better, more solid grounding for the real estate market.
The fact is, we live in one of the most desirable regions in the world. Certainly we’ve taken our fair share of hits over the last three years, but our region’s desirability, economic vitality, culture, weather and overall market conditions make it a sought-after place to live. We generally have a much healthier economy in the Bay Area. In terms of a US housing recovery, predicted to be slow, long, and modest; ours will probably be more favorable than most. Here’s an excerpt from a recent Wall Street Journal article on Atherton, which reminds us that real estate is very local, and home prices are very relative to that particular locale and economy.
“Only 60 home sales were completed in Atherton between January and the end of September, down from 70 in the same period in 2008, according to data tracker DataQuick. Median home prices also plunged to $2.78 million during that time from $4.15 million a year earlier. But behind that slowdown there has been more activity than meets the eye. Since May, Silicon Valley-ites have jumped back into the Atherton market, lured by the lower prices. Of the dozen or so Atherton homes sold for more than $5 million this year, 10 were completed in May or after, according DataQuick's analysis of public records. Last month, one newly built home sold for around $14 million.”
As we track Bay Area sales activity, we are seeing more encouraging signs. Based on what we’re seeing, we’re estimating that we can expect sales to moderate to a more sustainable pace. We are already seeing a rise in housing prices in the entry level, and may see a modest rise in our mid-level price points, and most likely we’ll see further adjustments downward in the high end. But this new normal is much more sustainable and will provide a solid foundation to build upon. It makes me excited about the future and gives us all hope for a productive and healthy 2010.
Now, let’s take a look at this week in real estate:
• East Bay—Berkeley buyers are difficult to read. One would assume the low interest rates and credits in favor of the buyer would move people off the fence. Agents are reporting that buyers are still waffling about writing offers, backing out in the face of multiple offers, or over offering and then coming back to sellers for credits or sales price reductions. Once in contract, loans and appraisals continue to slow the process or prevent a close. One deal was postponed because the buyer bought down the loan, thereby changing the rate just enough to trigger the mandatory delay of close. Fremont reported inventory is extraordinarily low. Most properties hitting the market are selling fast some with multiple offers. The buying pool is highly competitive. Livermore reported persistence is the name of the game on short sales. Oakland reported buyers like the new lower interest rates but finding the right property takes time. Still seeing multiple offers on well priced listings. We had 14 offers on a property listed for $1.5M in Pleasanton. Orinda and Danville both report low inventory, as does Walnut Creek –however agents in Walnut Creek are encouraged by two recent sales over $1M.
• Monterey County—We are beginning to receive a few more REO properties in last couple of weeks, as lenders have told us for weeks to expect. Agents continue to show properties, write offers at steady pace, and feel hopeful that the extension of the new home buyer credit of $8000 and the move-up buyer credit of $6500 and, even more importantly, the extension of the conforming rate to $729,750 for our area, will help boost our sales through next Spring at least.
• North Bay—Greenbrae reported one deal had recorded and the bank asked for funds to be returned because they found additional requirements for the buyer. SCARY! Buyers and sellers continue to negotiate deals once a price has been agreed to. Stubborn buyers + sellers= more deals falling apart. Agents must work around egos and emotions to get their clients what they want. Southern Marin reported the lower end is alive and well. Our office listed a fixer in Larkspur for $628K and received 4 offers while a property in Mill Valley, a foreclosure, listed at $728,000 received 10 offers. Petaluma reported multiple offers continue to be the norm under $500,000. We are seeing movement in the $600,000-$900,000 range. Inventory is scarce. Sebastopol reports lack of low end inventory is hurting sales. New properties held open this past weekend drew large crowds. Santa Rosa says lots of entry level transactions are coming together in spite of the low inventory. They are bringing on Previews listings and writing offers in the higher end –but finding negotiations very tough.
• Peninsula—Burlingame reports the inventory is continuing to shrink as buyers are becoming more willing to make offers. No one wants to over pay and counters go on 6 or 7 times but at least the will to make a deal is out there. The smart buyers see what is happening and fear a buyer’s market looming if there is no more inventory coming to the market. Q 4 is a great opportunity. Half Moon Bay reports still good activity for the under $1m range. Open house activity brings 12-15 groups through; which is considered good for the coast. Menlo Park El Camino reported the market is slow. Agents are getting really picky about taking over priced listings. The high end ($4 m plus) is very shaky and buyers are sitting on the sidelines waiting for the other higher priced shoe to drop. It feels like springtime is going to be a flood of listings (and hopefully some pent up buyers). Redwood City reports there seems to be more activity at the open houses. Agents have several buyers but there still seems to be a lack of good inventory. Buyers are watching for price adjustments and when they occur there are usually multiple offers but only two or three. Palo Alto reported that this is a very unusual market. One property could be hot, we presented an offer on a property a little over a million – there were over 30 offers. And yet around the corner, another property priced around a million received no offers.
• San Francisco—Lakeside reported less inventory than last year at this time yet more units have been sold. Lombard reported the reality of today’s market: most deals need lots of attention and tweaking and face lender problems. The good news: activity in the mid and upper markets. Average price point is rising. Market Street reports Agents are still busy writing offers, they are ratifying and some are not. For those who have not yet ratified, their buyers are persistently looking for homes to call their own by the end of the year. Still great traffic at open homes throughout the city. Noriega reported transactions are taking much longer to close, especially with financing involved. Typical deals with financing are taking at least 60 days to close. Van Ness shared some great news: we closed 44 deals during this period.
• Santa Cruz County—Market activity this week is winding down as the holiday nears. Inventory levels overall are extremely low and the under $500K market continues to draw multiple offers with cash being the deciding factor most of the time. The south county market - Watsonville has very little inventory. REO properties which we were listing are now dribbling in. The agents seem to be doing well with short sales, although the timeframes are long and if the client's expectations are not managed from the beginning, they lose interest.
• Silicon Valley—Cupertino reported it is very competitive in the lower price ranges. Short sales continue to be a major segment of the market. Los Altos reported the market is still active on well priced new listings under $2M. Some multiple offers are still coming in below asking, and most above asking by 5-10%. Willow Glen reported we have slowed down but still sales are coming in. Open houses are pretty slow though floor calls are still coming in meaning that there are interested buyers. Los Gatos and Saratoga say things are active in lower price points, while each of the offices have turned in a sale in the $4M range.
• South County—Hollister reported inventory is still low. Buyers are excited that the tax credit has been extended. Multiple offers continue on most listings under $400K. Cash buyers still prevail. Short sale listings are increasing. Morgan Hill reported all of us were very thankful that the first time home buyers tax credit was extended. That fact, accompanied by the $8000 tax credit for "move-up" buyers, provided even more encouragement that the housing market is on the road to recovery. The South County market is beginning to "seasonally" adjust--less activity at open houses and fewer consummated sales. In retrospect, however, many of our agents will end the year with solid production numbers.
I’ll leave you with a few interesting articles of note from the week:
• Cheaper Prices—More Than Tax Credit—Motivating Home Buyers; U.S. News and World Report
• Tax Credit Expands Home Buyer, Economic Opportunities; On Pace To Help 70% Of Potential Home Buyers; RISMedia
• Housing Cooled In October; Tax Credit Extension Expected To Drive Improvements; RISMedia
• Real Estate Outlook: Moving Towards Recovery; Realty Times
• And a local story regarding positive effects of Extended and Expanded Tax Credits http://www.insidebayarea.com/real-estate-news/ci_13801683
Finally, I’d like to take this opportunity to wish you and your families a very warm and blessed Thanksgiving. Despite the challenges in the market and the bumpy road we have taken to get here, we all have a great deal to be thankful for. Family. Friends. Health. Food. A roof over our heads. These are all things to hold close and cherish this special time of year. I for one am thankful for you and appreciate what you do each and every day. I feel very fortunate to be President of Coldwell Banker San Francisco Bay Area and am proud to be leading our excellent team into 2010.
Happy Thanksgiving! Please enjoy the time with your family and friends and we’ll return the week of the 30th with another edition of Weekly Market Watch.
Warm regards,
Rick
Rick Turley
President, San Francisco Bay Area
Coldwell Banker Residential Brokerage
Subscribe to:
Comments (Atom)