Weekly Market Watch

Weekly Market Watch
Week of January 13, 2008

The pent up demand is palpable. While economic and housing market headlines remain negative, Coldwell Banker Residential Brokerage listings in much of the San Francisco Bay Area are experiencing a surge of activity, and optimism is high. More than 350 homes were held open last week and saw attending groups ranging in size from a steady eight to 10 for listings in the North Bay to as many as 300 in a Potrero Hill, San Francisco open. Homes in Half Moon Bay, Central Contra Costa County and down the Peninsula are also seeing a spike in activity. More detail on Month’s Supply of Inventory next week, but at a quick glance this week I noticed that single family homes and condos in San Francisco have their lowest level of active available properties since late May, 2007.

Fresh inventory continues to be an issue for many parts of the Peninsula – Woodside/Portola Valley notes that demand for $10 million-plus listings is particularly high, but in short supply. This lends credence to the continued strength of the high end and luxury market. In San Francisco and on the Peninsula, we don’t compete with the glut of new homes on the market in other parts of the Bay Area that are further away from our urban core. Looking back at 2007, it’s interesting to report that while overall units were down about 10%, the high end markets kept our sales volume virtually intact in San Francisco and the Peninsula – and in many areas the decrease in units is more attributable to a shortage of inventory than from a lack of buyers. Unfortunately, media reports decline to mention that. They also fail to mention that median prices in many areas of San Francisco, Marin and parts of the Peninsula have actually increased over the previous year; again a testament to the strength of our high end market. 2008 may reflect a similar trend and it is up to the real estate community to be proactive in letting high end home sellers know that, in many areas they are likely to see throngs of eager buyers who have been waiting for those homes to come on the market.

DataQuick figures were recently released, another report which fails to acknowledge micro-markets and paints the Bay Area with a broad brush. According to DataQuick, sales for December were at an all time low and median prices reverted to 2005 levels. In addition, DataQuick figures are for closed transactions, which means that the sales reported for December actually began in October and November when the loan industry was still careening. Since that time, considerations of pending legislation regarding lending from Washington D.C. and Sacramento, new tax deductions, a reduction in new home starts, and the possibility of further rate cuts by the Fed, not to mention the surprisingly heavy attendance at our open homes, paint a brighter, more accurate, and more current picture of the state of Bay Area housing.

While the real estate industry as a whole continues to be accused of harboring what is perceived as insincere optimism, the realities of our Bay Area markets justify our enthusiasm. Keep it up! Buyers are listening and getting ready to buy.

Have a great week.
Rick

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