Weekly Market Watch

Coldwell Banker Weekly Market Watch
Week ending February 24, 2008

While listening to the radio the other day, I heard a news report stating that consumer confidence has plummeted in February to a 17-year low. The reporter went on to discuss how fears about the housing market and its impact on the economy are major factors in the increasing pessimism of the American consumer. Later, however, I found the actual consumer confidence index report online and, upon reading it, discovered this little nugget: Those with plans to buy a home rose in February from 2.5% to 2.7%. It was actually one of the few areas of the report that had improved month over month. I’m still trying to figure out how that news reporter wound up blaming the country’s real estate market for a decline in consumer confidence when the index clearly states that confidence in home buying is improving. The index also notes that consumers with plans to buy major appliances increased from 30.6% to 30.9% - maybe those new appliances will be installed in their new homes?

During a rainy holiday weekend, it became apparent that there are an increasing number of buyers who are getting serious about hopping off the fence. Though many seem to be waiting for the conforming loan limit increase in the economic stimulus package to take effect, there are also many who are taking advantage of the affordability existing in many of our markets right now. Buyers that are waiting to see a bottom would be best served by jumping in now. Typically, by the time we can see a bottom in the charts we are well past it and on the way back up. In areas with higher levels of inventory, price, condition and location continue to be crucial factors in home sales at virtually every price point. When those elements are balanced, we are seeing multiple offers. We are also starting to see inventory levels stabilizing in many areas – Danville being a case in point where inventory remain unchanged week over week, but new pending sales increased by 67%!

Open houses continued to sizzle with activity in most of our market areas. Buyers are “out everywhere” in Castro Valley. Petaluma reports its third straight week of double digit attendance at open houses, and multiple offers on well-priced homes. Santa Rosa also saw open houses with 20 groups or more. A new Burlingame Hills listing received more than 80 groups of visitors, and in Portola Valley, the listing agent stopped counting after 70 groups had already passed through the property.
San Francisco and the Peninsula markets continue to suffer from a lack of saleable inventory – and that has a greater impact on sales declines than much of what the news headlines report. There are still fewer than 40 active listings on the MLS in Palo Alto. In San Francisco, a listing in the $1.4 million range sold preemptively for 20% over asking. Redwood City – San Carlos reports incredible attendance at open houses and notes that more than 50% of homes sold had been on the market for fewer than ten days.