Weekly Market Watch

WEEKLY MARKET WATCH
Week of September 23rd

It is perplexing and frustrating to continue to see news reports with people who could be considered little more than “real estate pundits” talk about only one side of the current real estate story. This week, the controversial stock market analyst Jim Cramer of Mad Money told viewers of The Today Show that “If you buy a home now, you will lose money." He went on to add "there is no money and no programs for first time home buyers. Down payment money is the biggest issue in the market, because young people don't have any." Housing is a good long-term investment – it’s not a day-trading activity. As we witness the steep increase in foreclosures among housing boom “flippers” who secured sub-prime, adjustable rate loans with no money down, we see the folly of playing the housing market like the stock market.

Homes are not stocks. Most people stay in their home for about 6 years – they buy for the long haul to create a home for their family, not to buy, then turn around and sell six months later. Owning a home isn’t just about investment, although that’s certainly important. It’s also about building community, a place of your own, and having a part of the American Dream. For people who want to buy a home to live in, this is truly a great time to buy a home. In some areas there may be more to choose from, mortgage rates are historically low and the economy is strong. There are some investor opportunities out there as well, but it’s important to remember that the criteria regarding these buying decisions are different between the investor and the homeowner.

In our area we have seen steady appreciation in home values over the last 30 years. Regarding the median prices in many parts of the Bay Area and Silicon Valley, most specifically in San Francisco and the Peninsula, properties are not only holding steady, but actually increasing. The case could easily be made that waiting for prices to drop may make the realization of home ownership steadily more difficult. Signs aren’t pointing to bargain basement pricing ever becoming the norm in our markets, though price is now, as always, an important consideration. Smart buyers are buying. Smart sellers are selling.

Witness the number of buyers visiting our more than 600 homes held open last week. A Berkley listing was seen by almost 100 visitors. A Walnut Creek listing received four offers and sold for three percent over the current asking price. In San Mateo Park, a home received five offers and the lowest down payment among them was 50 percent. Palo Alto continues to report 100 percent multiple offers. One San Francisco office notes that the $2 million-plus market is “on fire.” The upper end markets are clearly not sending a negative message – in fact, quite the opposite. Last week San Francisco Van Ness closed both sides of a $7M property in a two week long escrow, and in the same week Woodside opened a new sale for $12M, sold by a fellow CB Menlo Park-El Camino agent, and the following day Woodside opened another $13M sale. Again, the message is quite the opposite of the doom and gloom which make headlines.

I encourage people to get the facts from an experienced real estate professional, the person most qualified to discuss the merits of home ownership. Not from a stock broker on television. Now more than ever, there is immense value in working with a real estate agent affiliated with a full-service brokerage, the professional who can guide clients through the financial elements of the real estate transaction from negotiating price to serving as a guide to the mortgage market. At Coldwell Banker Residential Brokerage, we also have a strong, in-house mortgage partner in Princeton Capital who can identify appropriate financing options for customers.

Have a great week!

Rick

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