Week of August 4-10
There are a lot of things challenging our market right now: traditional August slowdown, vacationing clients (and Realtors) as they soak up the last of the summer heat before school begins and, in some markets, limited quality inventory to generate buyer interest.
But though the media won’t begin reporting on this for another six to eight weeks, we are starting to see signs of a turnaround in the market. Open houses are well-attended. Buyers are finally coming off the fence and making offers. Princeton Capital is reporting an increased number of pre-approvals and mortgage applications. We’re really starting to see a surge of activity in several of our markets. Some markets are seeing the surge based on REOs while others are simply seeing it thanks to the old law of supply and demand—limited inventory = increased buyer demand. For example, Palo Alto continues to struggle with limited incoming inventory for the second consecutive week. Menlo Park continues to see dwindling inventory with limited incoming listings. Areas of the East Bay are also struggling with lower inventory and the City is seeing limited supply in the upper tier, where, if we had more to sell, we’d certainly sell them!
Based on buyer feedback at open houses, many of our agents are expecting that the Fall will provide us with a pretty healthy upswing. A lot of buyers—especially first time home buyers—are finally starting to come to the realization that this is one of the best buyer’s markets of our generation and they’d like to take advantage of it. Some are even hoping to do so before year’s end. Remember - the temporary increase of conforming loan limits to approximately $730k expires at the end of the year, and the new permanent legislation signed into law has a roughly $100k lower max loan limit, and starts January 1. Our Princeton loan officers in each branch have details on this to help educate home buyers. This will add to why we may expect to see a healthier Fall than in recent years.
Let’s see how this week’s activity played out in our local markets:
East Bay—The REO market continues to drive a large portion of the East Bay. The entry level market is flooding with activity with many REO properties going into multiple offers. Though prices are down in much of the East Bay, units are up and it is keeping our clients and Agents busy with activity. Interestingly enough, the high end is starting to pick up in Blackhawk and Alamo. Walnut Creek is reporting the same with two listings over $1 million selling in just a week. A trend or an anomaly? Only time will tell but we’ll certainly put these affluent markets on our radar to see how they pan out over the next several weeks.
Monterey—With vacationers heading home in this largely second home market and the traditional slow August upon us, Monterey is entering a bit of a sleepy phase. This week the entire region only opened five escrows so we’re definitely in the middle of the Monterey summer doldrums. REO activity remains strong in the entry level market but overall, this is shaping up to be a slow month for the entire region.
North Bay—The North Bay real estate market is about as diverse as its culture. Sonoma County continues to thrive in the entry level thanks to the REO phenomena and yet their mid-level and upper-end is very quiet. Nearby Marin County is seeing its blend of unique activity. The upper-end in this market continues to see limited inventory and there are quite a few buyers who want to act but just can’t find the right property. The lower-end continues to thrive—though you have to put “thrive” in perspective considering one San Rafael listing which sold this week. It was originally purchased in 2004 for $480,000 and it sold this week for $275,000. Value? Sign of the times? Probably a little bit of both. But definitely worth sharing to give both buyers and sellers alike a reality check.
Peninsula—A mixed bag. From one city to the next you can have a completely different vantage point. San Carlos and Redwood City report that buyers continue to sit on the fence “waiting to see” what is going to happen next, yet some of their listings are selling within a few weeks with multiple offers. Half Moon Bay reports another slow week but does note that Agent activity, buyer showings, open house activity and office walk-ins are all showing an increase—another good sign that we’ll see a strong Fall. On the flipside, the remainder of the Peninsula is looking pretty strong, falling short only in the area of inventory where limited inventory is causing fewer unit sales. This week Burlingame reported two foreign investor sales with one property selling for $2.8 million and another for $9.8 million. The dollar almost appears to have stabilized and foreign currency looks a little weaker, while oil has dropped the past few weeks. Could this have caused some foreign investors to get off the fence and invest in Bay Area real estate?
San Francisco—The City is seeing a surge of activity in the upper-end. TRI/Van Ness is reporting that nine of the 16 ratified offers were over $1 million and four were over $2 million. The Market Street office concurs noting that it had four ratified offers this week on properties that were in the $700,000 to $2.3 million range and all four had four offers each. Not bad!
Santa Cruz—Activity has slowed after a fairly active July. Agents are reporting that open house activity has been steady although buyers continue to be skeptical about the market. Sellers continue to be reluctant to adjust prices to a level that will attract offers. Once in escrow, buyers want to continue to negotiate and are not hesitate to walk so our sellers need to be prepared. How much you want to push an issue will depend on how bad you want that sale to go through.
Silicon Valley—Though buyers are out there, vacations or “stay”-cations are causing a bit of a lull in the market. Nearly the entire market reported decreasing or steady inventory. But to be honest, it’s no surprise and we certainly expect it this time of year. REOs continue to be a driving force for much of the entry-level market in Silicon Valley and this seems to be where much of the pulse of the market remains. One interesting note this week was from our in-house statistician (aka Los Altos First Street Manager), Fred Hibbert. In his weekly statistical report he shared that we currently have 1,964 pending sales of single family homes in Santa Clara County and 596 pending sales of condos and townhomes. Fred noted, “This is quite remarkable considering that this time last year was close to 900 pendings of SFRs and 330 pendings of condos/townhomes. We now have nearly double the sales! Wow!”
South County—We’re seeing very little change from week to week in this market. REOs continue to dominate the sales charts. Much like its Sonoma County counterpart—another outlying, more affordable market—the entry level, ROE market thrives while the mid-level and upper tier sits. We’ll more than likely continue to see this for at least a few more months as we continue to dwindle the inventory.
Overall inventories are decreasing in almost every community. Interest rates are low and stable. With recent inflation concerns, the Fed will probably take them up before they’ll take them down. The last several months of a $100k higher conforming loan limit should bring us good activity for the new well-priced inventory we need.
Monday, August 18, 2008
Weekly Market Watch
Weekly Market Watch
Covering Week of July 27-August 2
There was a lot of good, solid news for our industry this week:
· NAR released its Pending Home Sales Index—a forward-looking indicator based on contracts signed in June—which showed pending home sales rose 5.3%. Here in the West, the Index reports that pendings rose 4.6%. Though one month of increases doesn’t substantiate a rule, it is a good symbol of a housing market in transition. NAR Chief Economist Lawrence Yun noted, “The rise in pending home sales was broad-based with all four regions showing gains. This is welcome news because a rise in contract activity is necessary for an overall housing recovery. With a tax credit now available to first-time home buyers, increases in home sales could be sustained with the momentum carrying into 2009.”
· Another article of interest, the Washington Post’s Housing Collapse Ahead? Not According to the Data, article reported on the finding of the Office of Federal Housing Enterprise Oversight report which stated, “We conclude that declines in house prices are highly likely to remain small. Our analysis reveals, unsurprisingly, that foreclosures and home prices have negative effects on each other over time, but this does not imply a vicious cycle of collapsing prices. Our models predict that as foreclosures continue to climb in many states, house prices will remain flat or decline in those states—but will not collapse.”
· And finally, possibly the best news of all, Bloomberg reported in its July 31, 2008 article entitled California's Discount Foreclosure Sales Point to Housing Bottom, “California led the U.S. into the worst housing recession since the 1930s. Now the most populous state may be the first to find the bottom.” The reporter’s findings were based on the fact that sales in our state have risen three consecutive months starting in April after 30 straight months of declines, according to CAR. About 40% of those transactions were foreclosure sales. What this trend is showing is that we are slowly starting to deplete our inventory, especially in the entry-level market where foreclosures and REOs are most common. In fact, statewide, CAR is reporting that our inventory last month dropped to 7.2 months of supply, down from 10.2 months a year ago.
Things are definitely starting to move out there. There are a number of reasons for this. Yes, REOs do become a factor in many of the outlying and more affordable markets like parts of the East Bay, Sonoma County, South County, Santa Cruz and parts of Silicon Valley. But there are many markets that have been almost immune to the REO phenomena; instead these markets are seeing the opposite challenge—a lack of inventory. Believe it or not, in many cities of the Bay Area, lack of inventory remains a major problem. Consider Berkeley where its inventory is hovering in the 2-3 month arena. Just to give you an idea, within the last two weeks, the Berkeley office has had nine multiple offers or about one in every three listings is going into multiples. Consider, too, Palo Alto where this week alone, there were only four new properties on tour. Wow, can we remember the last time we had a market with such limited inventory? It seems like ages.
So with our excitement in tow, let’s head into the market update:
East Bay—Agents exhausted because of buyer activity. Myth? No. It’s happening. Castro Valley is reporting that they are showing properties every day and writing tons of offers. “The competition is fierce within our micro-market for those great deals. Agents are writing, two, three, four, even five offers on behalf of their clients, hoping at least one will be accepted. Nonetheless, we are getting our clients into contract.” While Castro Valley is on fire, not all parts of the East Bay are feeling the heat. The Tri-Valley and San Ramon Valley are moving quite smoothly in the REO and entry-level market but the high-end is very quiet.
Monterey Bay—We’re seeing multiple offers on REOs in this market, including on one $2.5 million listing. We are starting to see a lot of cancellations on listings. In fact, we’ve had 17 canceled escrows in the last four weeks. Nevertheless, listing inventory and sales activity remains steady.
North Bay—For months I’ve been talking about Sonoma’s REO activity. Interestingly, this week is different. Sebastopol reported six offers this week, three of which went into multiple offers. Surprisingly, the three multiples weren’t in the $400,000 range, they were all in the $1.3 to $2.2 million range. A good sign for the upper end in this region. The buyers are out there! Santa Rosa is reporting a decline in activity in REOs this week—the first time in four months. But the entry-level is still where the action is in this market. Marin seems to be the same as last week with sporadic activity at open houses and still some strong upper-end activity; a Corte Madera property at $2M+ received multiple offers and went immediately into contract. The good news is that we are starting to see some price reductions in this market as well—Southern Marin is reporting that 55% of their inventory has reduced its price—so this could breathe a little life into some our Marin buyers.
Peninsula—You just can’t predict it. One Atherton teardown (not on the MLS) had five offers and went substantially over the $4.2 million asking price. In Menlo Park, multiple offers are the norm. Some, however, don’t even garner the list price while others go way, way over. Again, hard to predict. Palo Alto MLS only had four new listings on tour this past week! Burlingame is reporting that the market is changing—for the better. Offers aren’t always being accepted but at least buyers are back in the saddle and trying. A San Mateo agent was able to get a Foster City condo seller to follow advice on pricing and staging, and received four offers immediately while the competing units still sit. Really interesting note is that 3 of the 4 were totally non-contingent. Half Moon Bay buyers seem to be enjoying summer vacations as activity has been very slow. Yet the good news is that listing inventory is decreasing and Manager Robert Ross is reporting that this is one of the best times in years to purchase a home on the coast.
San Francisco—Buyers are our there and we know how to find them! That seems to be the case even in light of the City’s summer slow down, buyers are willing to act as long as the home is priced well and shows well. One SF Lombard listing received five offers and went about 10% over asking. Another Lombard listing received three offers and went slightly over asking. As I reported last week, the high-end for our TRI office is moving briskly and this week was no different with three multiple offers. All of our San Francisco offices are reporting steady or increased sales activity, a sign of good things to come as we head into the fall market.
Santa Cruz—Activity is better overall. Sellers continue to try to come to grips with the reality of the market and the real price it will take for a home to sell. It has got to be a good deal in the buyer’s eyes or they’ll move on to the next property.
Silicon Valley—Floor calls and open house activity are music to our Agents’ ears in Silicon Valley and we’re finally seeing both in this market. Activity is definitely picking up in Silicon Valley and the phone is ringing with buyer interest. Los Gatos is reporting that open houses are great with solid buyers coming through. Los Altos San Antonio is reporting that listings and sales are up. San Jose Willow Glen is reporting that it is busy with sales and lots of floor calls—a great sign as we head into the end of the summer doldrums.
South County—Inventory, sales and activity seem to all go unchanged in South County. Overall, the market continues to be driven by REO activity. Most multiple offers are on REO properties and the mid to upper end tends to sit for a much longer period of time. However, in this market, one thing is certain, homes that are priced right and competitively and show well, will sell.
Regardless of the market or the reason behind the recent upswing, things are starting to pick up throughout Northern California. It seems buyers are finally starting to get the message that we may have hit bottom and, as buyers take action, we’re slowly but surely working our way into a transitioning market.
I am excited to see what is to come this Fall. Remember, this time last year, we were heading into the heat of the mortgage crisis. Now, a year later, we have come out of what some may say was one of the worst housing markets in decades and, yet, we’ve managed through it and are moving forward, progressing and finally starting to see a breakthrough in the market. It’s been challenging but what we have to look forward to is exciting. Prepare! The coming months and into 2009 are going to be an exciting ride!
Covering Week of July 27-August 2
There was a lot of good, solid news for our industry this week:
· NAR released its Pending Home Sales Index—a forward-looking indicator based on contracts signed in June—which showed pending home sales rose 5.3%. Here in the West, the Index reports that pendings rose 4.6%. Though one month of increases doesn’t substantiate a rule, it is a good symbol of a housing market in transition. NAR Chief Economist Lawrence Yun noted, “The rise in pending home sales was broad-based with all four regions showing gains. This is welcome news because a rise in contract activity is necessary for an overall housing recovery. With a tax credit now available to first-time home buyers, increases in home sales could be sustained with the momentum carrying into 2009.”
· Another article of interest, the Washington Post’s Housing Collapse Ahead? Not According to the Data, article reported on the finding of the Office of Federal Housing Enterprise Oversight report which stated, “We conclude that declines in house prices are highly likely to remain small. Our analysis reveals, unsurprisingly, that foreclosures and home prices have negative effects on each other over time, but this does not imply a vicious cycle of collapsing prices. Our models predict that as foreclosures continue to climb in many states, house prices will remain flat or decline in those states—but will not collapse.”
· And finally, possibly the best news of all, Bloomberg reported in its July 31, 2008 article entitled California's Discount Foreclosure Sales Point to Housing Bottom, “California led the U.S. into the worst housing recession since the 1930s. Now the most populous state may be the first to find the bottom.” The reporter’s findings were based on the fact that sales in our state have risen three consecutive months starting in April after 30 straight months of declines, according to CAR. About 40% of those transactions were foreclosure sales. What this trend is showing is that we are slowly starting to deplete our inventory, especially in the entry-level market where foreclosures and REOs are most common. In fact, statewide, CAR is reporting that our inventory last month dropped to 7.2 months of supply, down from 10.2 months a year ago.
Things are definitely starting to move out there. There are a number of reasons for this. Yes, REOs do become a factor in many of the outlying and more affordable markets like parts of the East Bay, Sonoma County, South County, Santa Cruz and parts of Silicon Valley. But there are many markets that have been almost immune to the REO phenomena; instead these markets are seeing the opposite challenge—a lack of inventory. Believe it or not, in many cities of the Bay Area, lack of inventory remains a major problem. Consider Berkeley where its inventory is hovering in the 2-3 month arena. Just to give you an idea, within the last two weeks, the Berkeley office has had nine multiple offers or about one in every three listings is going into multiples. Consider, too, Palo Alto where this week alone, there were only four new properties on tour. Wow, can we remember the last time we had a market with such limited inventory? It seems like ages.
So with our excitement in tow, let’s head into the market update:
East Bay—Agents exhausted because of buyer activity. Myth? No. It’s happening. Castro Valley is reporting that they are showing properties every day and writing tons of offers. “The competition is fierce within our micro-market for those great deals. Agents are writing, two, three, four, even five offers on behalf of their clients, hoping at least one will be accepted. Nonetheless, we are getting our clients into contract.” While Castro Valley is on fire, not all parts of the East Bay are feeling the heat. The Tri-Valley and San Ramon Valley are moving quite smoothly in the REO and entry-level market but the high-end is very quiet.
Monterey Bay—We’re seeing multiple offers on REOs in this market, including on one $2.5 million listing. We are starting to see a lot of cancellations on listings. In fact, we’ve had 17 canceled escrows in the last four weeks. Nevertheless, listing inventory and sales activity remains steady.
North Bay—For months I’ve been talking about Sonoma’s REO activity. Interestingly, this week is different. Sebastopol reported six offers this week, three of which went into multiple offers. Surprisingly, the three multiples weren’t in the $400,000 range, they were all in the $1.3 to $2.2 million range. A good sign for the upper end in this region. The buyers are out there! Santa Rosa is reporting a decline in activity in REOs this week—the first time in four months. But the entry-level is still where the action is in this market. Marin seems to be the same as last week with sporadic activity at open houses and still some strong upper-end activity; a Corte Madera property at $2M+ received multiple offers and went immediately into contract. The good news is that we are starting to see some price reductions in this market as well—Southern Marin is reporting that 55% of their inventory has reduced its price—so this could breathe a little life into some our Marin buyers.
Peninsula—You just can’t predict it. One Atherton teardown (not on the MLS) had five offers and went substantially over the $4.2 million asking price. In Menlo Park, multiple offers are the norm. Some, however, don’t even garner the list price while others go way, way over. Again, hard to predict. Palo Alto MLS only had four new listings on tour this past week! Burlingame is reporting that the market is changing—for the better. Offers aren’t always being accepted but at least buyers are back in the saddle and trying. A San Mateo agent was able to get a Foster City condo seller to follow advice on pricing and staging, and received four offers immediately while the competing units still sit. Really interesting note is that 3 of the 4 were totally non-contingent. Half Moon Bay buyers seem to be enjoying summer vacations as activity has been very slow. Yet the good news is that listing inventory is decreasing and Manager Robert Ross is reporting that this is one of the best times in years to purchase a home on the coast.
San Francisco—Buyers are our there and we know how to find them! That seems to be the case even in light of the City’s summer slow down, buyers are willing to act as long as the home is priced well and shows well. One SF Lombard listing received five offers and went about 10% over asking. Another Lombard listing received three offers and went slightly over asking. As I reported last week, the high-end for our TRI office is moving briskly and this week was no different with three multiple offers. All of our San Francisco offices are reporting steady or increased sales activity, a sign of good things to come as we head into the fall market.
Santa Cruz—Activity is better overall. Sellers continue to try to come to grips with the reality of the market and the real price it will take for a home to sell. It has got to be a good deal in the buyer’s eyes or they’ll move on to the next property.
Silicon Valley—Floor calls and open house activity are music to our Agents’ ears in Silicon Valley and we’re finally seeing both in this market. Activity is definitely picking up in Silicon Valley and the phone is ringing with buyer interest. Los Gatos is reporting that open houses are great with solid buyers coming through. Los Altos San Antonio is reporting that listings and sales are up. San Jose Willow Glen is reporting that it is busy with sales and lots of floor calls—a great sign as we head into the end of the summer doldrums.
South County—Inventory, sales and activity seem to all go unchanged in South County. Overall, the market continues to be driven by REO activity. Most multiple offers are on REO properties and the mid to upper end tends to sit for a much longer period of time. However, in this market, one thing is certain, homes that are priced right and competitively and show well, will sell.
Regardless of the market or the reason behind the recent upswing, things are starting to pick up throughout Northern California. It seems buyers are finally starting to get the message that we may have hit bottom and, as buyers take action, we’re slowly but surely working our way into a transitioning market.
I am excited to see what is to come this Fall. Remember, this time last year, we were heading into the heat of the mortgage crisis. Now, a year later, we have come out of what some may say was one of the worst housing markets in decades and, yet, we’ve managed through it and are moving forward, progressing and finally starting to see a breakthrough in the market. It’s been challenging but what we have to look forward to is exciting. Prepare! The coming months and into 2009 are going to be an exciting ride!
Sunday, August 3, 2008
Weekly Market Watch
Weekly Market Watch
July 20-July 26
Good news this week for home buyers and sellers. On July 30, 2008, the President signed the Housing Economic Recovery Act of 2008 into legislation. The legislation will go a long way in helping to stabilize the housing market and will make the dream of home ownership more attainable for many Americans.
So what does the government intend to accomplish through this new legislation? The Housing Economic Recovery Act of 2008 seeks to:
Add stability to the market by supporting Fannie Mae and Freddie Mac.
Help first-time homebuyers with increased loan limits.
Provides a $7,500 tax credit that is effectively a no-interest loan that is payable over 15 years ($500/year) after the credit is received on the homeowners’ first-year tax return.
The most immediate benefit of this bill is that the temporary increases in conforming and FHA loan limits that were part of the Economic Stimulus Plan, signed earlier this year, were made permanent. For us in the Bay Area –the loan limit piece of the legislation is somewhat bittersweet. The temporary loan limit put in place earlier this year for most of our region was a maximum $729,000, up dramatically from the low $400’s. So while the new $625,500 is permanent, we’ve lost over $100,000 toward purchase price which is greatly needed in our mid-range. I’ve talked with leadership at Princeton Capital, and they are coming up with some good alternatives with creating products on their banking side, as well as new relationships on the broker side in order to help more of our local Buyers.
To view a complete look at the provisions of the bill, click here: http://www.realtor.org/gapublic.nsf/pages/hr_3221_key_provisions
Now, let’s move on to our weekly market recap. This week:
East Bay: We are seeing REOs in Oakland and West Contra Costa County, many of which are getting two to three offers. In our higher-end East Bay markets, we’re feeling a shortage of inventory. To give you an idea of how the Berkeley-area market is fairing there are 2.7 months supply of homes in Berkeley, 1.7 months in Albany and 3.2 months in El Cerrito. Inventory in Danville-San Ramon area dropped significantly this past week and new pending sales rose dramatically. We haven’t seen that happen during a July (traditionally a slow vacation month) for some time in recent memory.
Monterey County: Steady but slow seems to be the current pace.
North Bay: This week one agent pointed out that it is taking longer for buyers to find their own perception of value with such confusing market signals. Some who may appear picky, may simply be confused. Good opportunity to use Market Trends and drill down on neighborhood-specific statistics for some of these buyers. Sonoma County continues at a pretty feverish pace in the entry level market thanks to REOs. All three offices report that we are seeing multiple offers in this niche but once you rise above the $500,000 to $600,000 market, properties often languish. In Marin, we are seeing a bit of a traditional summer slowdown, vacations taking their toll. If we had more well-priced upper end homes, we could sell them. In the past few weeks the Greenbrae office closed on a Belvedere home at over $6.4M, and another San Anselmo home at $4M. This price range seems to be selling within 60 days, or totally off-market, quickly and quietly.
Peninsula: Opens were slower this week (again, not surprisingly, as this is a traditional summer slowdown period as clients go on vacation) with the exception of Foster City and Redwood Shores which were both very busy. Menlo Park remains a mixed bag with lots of multiple offers. Some multiples don’t even hit the list price while others go way over. Palo Alto inventory remains very low with LOTS of activity at opens. I heard from one of our MP agents whose clients missed out on multiple offers for an Atherton teardown over $4M – a significant overbid lost to an even greater one. The Burlingame office had a nice week of closing a handful of properties between $1.5M and $2.5M.
San Francisco: Vacations continue to take their toll on the City. Things have simply slowed because clients aren’t in town. Come late August and September things will certainly bounce back. In fact, even during the summer doldrums, our San Francisco offices had 10 multiple offers this week. And our Market Street office seems to be immune to the summer slowdown noting “the conference rooms were busy in the evenings with agents writing offers” and some back-up Buyers moving into first position. TRI/Van Ness noticed that the lower end seemed a bit slower, as they continue to put together several transactions per week in the $2.5 to $6M range.
Santa Cruz County: The luxury market continues to drag. However, and sellers, please take note, prices in the introductory and move-up markets that are priced 5-10% below the last sale in the area are getting attention. Watsonville continues to be very active with bank owned sales in the market and there continues to be pent-up demand.
South County: The annual Gilroy Garlic Festival really slowed things down for this market. However, now that the festival is over, sales continue to trend up, especially in the lower-priced REO and entry-level properties. Many of the REO properties continue to enjoy multiple offers. Hollister noted that the only sales that they saw this week were REOs, a sign of the times in this market. This is a good lesson for sellers in this market. If you need to sell, you need to be competitive with the REOs.
Silicon Valley: Buyers are stepping up for the homes that are well presented and well priced. In fact, this isn’t a bad lesson for every market to embrace. Overall, the Silicon Valley market is moving pretty smoothly. Interestingly enough, in Los Altos, the market that seems to be slowest is the condo/townhome market. Los Gatos shares that the old adage of homes that are priced right and show well and those buyers/sellers who can work through and be patient through the negotiations are moving and finding success in today’s market. San Jose Almaden concurs noting that the market remains fairly steady and well-cared for properties that are priced correctly often sell fast.
July 20-July 26
Good news this week for home buyers and sellers. On July 30, 2008, the President signed the Housing Economic Recovery Act of 2008 into legislation. The legislation will go a long way in helping to stabilize the housing market and will make the dream of home ownership more attainable for many Americans.
So what does the government intend to accomplish through this new legislation? The Housing Economic Recovery Act of 2008 seeks to:
Add stability to the market by supporting Fannie Mae and Freddie Mac.
Help first-time homebuyers with increased loan limits.
Provides a $7,500 tax credit that is effectively a no-interest loan that is payable over 15 years ($500/year) after the credit is received on the homeowners’ first-year tax return.
The most immediate benefit of this bill is that the temporary increases in conforming and FHA loan limits that were part of the Economic Stimulus Plan, signed earlier this year, were made permanent. For us in the Bay Area –the loan limit piece of the legislation is somewhat bittersweet. The temporary loan limit put in place earlier this year for most of our region was a maximum $729,000, up dramatically from the low $400’s. So while the new $625,500 is permanent, we’ve lost over $100,000 toward purchase price which is greatly needed in our mid-range. I’ve talked with leadership at Princeton Capital, and they are coming up with some good alternatives with creating products on their banking side, as well as new relationships on the broker side in order to help more of our local Buyers.
To view a complete look at the provisions of the bill, click here: http://www.realtor.org/gapublic.nsf/pages/hr_3221_key_provisions
Now, let’s move on to our weekly market recap. This week:
East Bay: We are seeing REOs in Oakland and West Contra Costa County, many of which are getting two to three offers. In our higher-end East Bay markets, we’re feeling a shortage of inventory. To give you an idea of how the Berkeley-area market is fairing there are 2.7 months supply of homes in Berkeley, 1.7 months in Albany and 3.2 months in El Cerrito. Inventory in Danville-San Ramon area dropped significantly this past week and new pending sales rose dramatically. We haven’t seen that happen during a July (traditionally a slow vacation month) for some time in recent memory.
Monterey County: Steady but slow seems to be the current pace.
North Bay: This week one agent pointed out that it is taking longer for buyers to find their own perception of value with such confusing market signals. Some who may appear picky, may simply be confused. Good opportunity to use Market Trends and drill down on neighborhood-specific statistics for some of these buyers. Sonoma County continues at a pretty feverish pace in the entry level market thanks to REOs. All three offices report that we are seeing multiple offers in this niche but once you rise above the $500,000 to $600,000 market, properties often languish. In Marin, we are seeing a bit of a traditional summer slowdown, vacations taking their toll. If we had more well-priced upper end homes, we could sell them. In the past few weeks the Greenbrae office closed on a Belvedere home at over $6.4M, and another San Anselmo home at $4M. This price range seems to be selling within 60 days, or totally off-market, quickly and quietly.
Peninsula: Opens were slower this week (again, not surprisingly, as this is a traditional summer slowdown period as clients go on vacation) with the exception of Foster City and Redwood Shores which were both very busy. Menlo Park remains a mixed bag with lots of multiple offers. Some multiples don’t even hit the list price while others go way over. Palo Alto inventory remains very low with LOTS of activity at opens. I heard from one of our MP agents whose clients missed out on multiple offers for an Atherton teardown over $4M – a significant overbid lost to an even greater one. The Burlingame office had a nice week of closing a handful of properties between $1.5M and $2.5M.
San Francisco: Vacations continue to take their toll on the City. Things have simply slowed because clients aren’t in town. Come late August and September things will certainly bounce back. In fact, even during the summer doldrums, our San Francisco offices had 10 multiple offers this week. And our Market Street office seems to be immune to the summer slowdown noting “the conference rooms were busy in the evenings with agents writing offers” and some back-up Buyers moving into first position. TRI/Van Ness noticed that the lower end seemed a bit slower, as they continue to put together several transactions per week in the $2.5 to $6M range.
Santa Cruz County: The luxury market continues to drag. However, and sellers, please take note, prices in the introductory and move-up markets that are priced 5-10% below the last sale in the area are getting attention. Watsonville continues to be very active with bank owned sales in the market and there continues to be pent-up demand.
South County: The annual Gilroy Garlic Festival really slowed things down for this market. However, now that the festival is over, sales continue to trend up, especially in the lower-priced REO and entry-level properties. Many of the REO properties continue to enjoy multiple offers. Hollister noted that the only sales that they saw this week were REOs, a sign of the times in this market. This is a good lesson for sellers in this market. If you need to sell, you need to be competitive with the REOs.
Silicon Valley: Buyers are stepping up for the homes that are well presented and well priced. In fact, this isn’t a bad lesson for every market to embrace. Overall, the Silicon Valley market is moving pretty smoothly. Interestingly enough, in Los Altos, the market that seems to be slowest is the condo/townhome market. Los Gatos shares that the old adage of homes that are priced right and show well and those buyers/sellers who can work through and be patient through the negotiations are moving and finding success in today’s market. San Jose Almaden concurs noting that the market remains fairly steady and well-cared for properties that are priced correctly often sell fast.
Weekly Market Watch
Weekly Market Watch
Week of July 14-20
“If you really want to sell this place, you need to think and act like a salesperson.” I read this well thought-out statement this past week in The Wall Street Journal with interest. The reporter, David Crook, in his article entitled “How to Sell a House, When You Have to Sell it Now” gave sellers seven tips on selling a house in the current market.
While some of the statements are debatable depending on the neighborhood and market, what I liked was the fact that he underscored that sellers must separate their emotional attachment to their family home from their financial interest in their family’s largest asset. He noted something that I think in this market many sellers forego, the fact that sellers must treat selling a house as business, and they must approach the sale in a businesslike manner.
Here is a paraphrase of what Crook wrote as his Seven Tips on Selling a House in the Current Market:
Ø Don’t Wait Around: Even in the better housing areas, it's taking a longer time to sell houses.
Ø Fix it Up and Clean it Up: Buyers are taking your house out on a date. It has to make a good impression.
Ø Price it Competitively: Don't fight the market by trying to price your house at bubble-era levels or by factoring in all those improvements you made. It won't fly.
Ø Hire a Top Real Estate Agent: Get the best, most aggressive selling (listing) agent you can find.
Ø Promote. Promote. Promote.: Don't rely on the agent to do all the work. The agent should pay the usual marketing costs, but you should be prepared to pony up for extras, especially if you insist on more expensive or untraditional promotions.
Ø Play the Banker: If you have no mortgage you have to pay off, your strongest selling point might be your ability to finance all or a substantial part of a buyer's purchase.
Ø Take the Offer: If any qualified buyer comes in with a reasonable offer, be prepared to accept it.
For the majority of our communities and most circumstances, Crook’s points are right on the money and all told, should help to synopsize today’s market for sellers and prospective sellers—especially as we prepare listings for market release. The key point to remember is pricing. Pricing is probably the single most important factor in today’s market, regardless of the property’s price point. We need to competitively price our listings based on current comps that are no more than three months old. In our more sought-after neighborhoods –a significant price reduction where warranted can bring almost immediate results. In some others areas where more inventory exists, a decent price reduction cannot ensure a fast sale – all the more need for an attractive price from the get-go. Several weeks ago a large Twin Peaks home with incredible two bridge views closed escrow. It took a major $1M price reduction, and almost immediately went into escrow - considerably higher than the new reduced priced. This was after many months on the market at the higher price.
Another example: a three bedroom, two bath San Mateo listing this week which was competitively priced (as compared to its neighbors) at $567,000. The listing sold in three days with three offers, leaving its higher-priced neighbors languishing on the market. Those “left-over” buyers didn’t seek out the existing unsold listings –they’ll probably wait for another new listing at a competitive price. Sellers need to be aware of this fact when they price their homes. Again, take the emotion out of it. It’s a business deal and we need to think accordingly to see sale success in today’s market. More and more we are hearing that extremely competitively priced homes in high demand areas are getting on average 3 or 4 offers, IF they get multiples, and that normally one or more is under listing price.
Now, let’s move on to our weekly market recap. This week in our market:
East Bay—Can you say “R-E-O”? Yes, that is what is driving much of the East Bay market. But caution. REOs don’t make for a perfect world. Take Castro Valley for instance. While we are consistently seeing multiple offers on most REOs, we are actually now seeing banks come back to the table asking for more money. Yes, they are actually INCREASING the sales price once the offers are on the table. Many buyers are frustrated and just walking away, in hopes that the next great deal is just around the corner. Despite this, Castro Valley went into escrow on six properties this week. Not bad! Fremont is reporting that sales in the under $600,000 entry level market continue to be brisk while the move-up market has slowed dramatically over the last several months. Livermore is definitely a city to watch. Consider this: Year over year, active inventory is down 14.6% and pending sales have increased 79% (and no, that’s not a typo!). Livermore is on our radar and it should be for many of your clients, too.
Monterey County—Monterey County seems to moving steadily along with many of its outlying areas seeing an influx of REO activity.
North Bay—The Marin County market is buzzing with activity though we’re not seeing that buzz translate into closed deals. The good news is that we are seeing a lot of activity at opens. We are seeing a lot of buyer activity and showings. And floor time activity is increasing. Now we wait to see if all of that buzz results in closings. On the flipside, Sonoma County is all abuzz with continued REO activity. Our Sebastopol office reported that one $320,000 REO listing received 13 offers! And in one week they introduced 10 new REO listings to the market. Nearby Santa Rosa reports that the under $500,000 entry level market continues to prosper, often with multiple offers, while the $600,000-$1 million move-up market continues to remain slow.
Peninsula—Foster City and Redwood Shores seem to be enjoying an unusually busy open season. Our Burlingame office is reporting that buyers seem to be taking our counsel and are starting to cautiously make offers. Palo Alto seems to be on fire! Inventory is hovering around 70-75 in Palo Alto, with multiple offers occurring on almost everything below $2.5 million. The Palo Alto luxury market also remains strong, often times the listings are selling before they hit the market. Redwood City and San Carlos are reporting that buyers are very cautious about making offers and seem to still think prices will decline. Have they read the most recent Reality Check message? This may be a good time for a refresher?
San Francisco—Much of the City seems to suddenly be experiencing the summer doldrums. With residents fleeing the City to enjoy much needed vacations and many of our own Agents doing the same, activity seems to have slowed a bit—but of course it is important to point out that this is very traditional for this time of year. Having said that, open houses still remain pretty active which is a good sign that activity will increase over the next month. Typically, once we are through the July and mid-August slowdown, we start to see a strong increase as we head into September and I think this year will be no different. One interesting note I would like to point out, however, is that of our Lakeside office which, despite the summer slowdown, enjoyed seven multiple offers this past week. Not bad for July!
Santa Cruz County—Price seems to be the name of the game in this market. The old adage of “if it shows well and is priced well, it will sell” is certainly holding true. Sellers need to continue to price their home competitively and adjust the price downward in a timely manner in order to get the property sold.
Silicon Valley—Continues to be a mixed bag. One thing we are seeing throughout the market is increased open house activity. It seems buyers are finally coming to the realization that this is the best time to buy and are cautiously moving forward. Our Cupertino De Anza office went up to 21 pendings this week. Our Los Altos First Street office is noting that 33% of its sales went into multiples. And Los Gatos is proudly noting “We are lucky with lots of activity and cash buyers.” The flip side? While activity is starting to increase, the issue seems to be closing the deals. Some buyers are having difficulty qualifying for loans. Others are pulling out with little to no warning. The key is keeping the transaction together which often takes a lot of negotiation on both sides of the transaction.
All in all, the market is continuing rather steadily as it has the last several weeks. Things seem to be moving at a steady pace—even with many vacationing Realtors and clients. Buyers and sellers who are facing the realities of today’s market seem to be the most successful. Those who are living in the past seem to languish.
Week of July 14-20
“If you really want to sell this place, you need to think and act like a salesperson.” I read this well thought-out statement this past week in The Wall Street Journal with interest. The reporter, David Crook, in his article entitled “How to Sell a House, When You Have to Sell it Now” gave sellers seven tips on selling a house in the current market.
While some of the statements are debatable depending on the neighborhood and market, what I liked was the fact that he underscored that sellers must separate their emotional attachment to their family home from their financial interest in their family’s largest asset. He noted something that I think in this market many sellers forego, the fact that sellers must treat selling a house as business, and they must approach the sale in a businesslike manner.
Here is a paraphrase of what Crook wrote as his Seven Tips on Selling a House in the Current Market:
Ø Don’t Wait Around: Even in the better housing areas, it's taking a longer time to sell houses.
Ø Fix it Up and Clean it Up: Buyers are taking your house out on a date. It has to make a good impression.
Ø Price it Competitively: Don't fight the market by trying to price your house at bubble-era levels or by factoring in all those improvements you made. It won't fly.
Ø Hire a Top Real Estate Agent: Get the best, most aggressive selling (listing) agent you can find.
Ø Promote. Promote. Promote.: Don't rely on the agent to do all the work. The agent should pay the usual marketing costs, but you should be prepared to pony up for extras, especially if you insist on more expensive or untraditional promotions.
Ø Play the Banker: If you have no mortgage you have to pay off, your strongest selling point might be your ability to finance all or a substantial part of a buyer's purchase.
Ø Take the Offer: If any qualified buyer comes in with a reasonable offer, be prepared to accept it.
For the majority of our communities and most circumstances, Crook’s points are right on the money and all told, should help to synopsize today’s market for sellers and prospective sellers—especially as we prepare listings for market release. The key point to remember is pricing. Pricing is probably the single most important factor in today’s market, regardless of the property’s price point. We need to competitively price our listings based on current comps that are no more than three months old. In our more sought-after neighborhoods –a significant price reduction where warranted can bring almost immediate results. In some others areas where more inventory exists, a decent price reduction cannot ensure a fast sale – all the more need for an attractive price from the get-go. Several weeks ago a large Twin Peaks home with incredible two bridge views closed escrow. It took a major $1M price reduction, and almost immediately went into escrow - considerably higher than the new reduced priced. This was after many months on the market at the higher price.
Another example: a three bedroom, two bath San Mateo listing this week which was competitively priced (as compared to its neighbors) at $567,000. The listing sold in three days with three offers, leaving its higher-priced neighbors languishing on the market. Those “left-over” buyers didn’t seek out the existing unsold listings –they’ll probably wait for another new listing at a competitive price. Sellers need to be aware of this fact when they price their homes. Again, take the emotion out of it. It’s a business deal and we need to think accordingly to see sale success in today’s market. More and more we are hearing that extremely competitively priced homes in high demand areas are getting on average 3 or 4 offers, IF they get multiples, and that normally one or more is under listing price.
Now, let’s move on to our weekly market recap. This week in our market:
East Bay—Can you say “R-E-O”? Yes, that is what is driving much of the East Bay market. But caution. REOs don’t make for a perfect world. Take Castro Valley for instance. While we are consistently seeing multiple offers on most REOs, we are actually now seeing banks come back to the table asking for more money. Yes, they are actually INCREASING the sales price once the offers are on the table. Many buyers are frustrated and just walking away, in hopes that the next great deal is just around the corner. Despite this, Castro Valley went into escrow on six properties this week. Not bad! Fremont is reporting that sales in the under $600,000 entry level market continue to be brisk while the move-up market has slowed dramatically over the last several months. Livermore is definitely a city to watch. Consider this: Year over year, active inventory is down 14.6% and pending sales have increased 79% (and no, that’s not a typo!). Livermore is on our radar and it should be for many of your clients, too.
Monterey County—Monterey County seems to moving steadily along with many of its outlying areas seeing an influx of REO activity.
North Bay—The Marin County market is buzzing with activity though we’re not seeing that buzz translate into closed deals. The good news is that we are seeing a lot of activity at opens. We are seeing a lot of buyer activity and showings. And floor time activity is increasing. Now we wait to see if all of that buzz results in closings. On the flipside, Sonoma County is all abuzz with continued REO activity. Our Sebastopol office reported that one $320,000 REO listing received 13 offers! And in one week they introduced 10 new REO listings to the market. Nearby Santa Rosa reports that the under $500,000 entry level market continues to prosper, often with multiple offers, while the $600,000-$1 million move-up market continues to remain slow.
Peninsula—Foster City and Redwood Shores seem to be enjoying an unusually busy open season. Our Burlingame office is reporting that buyers seem to be taking our counsel and are starting to cautiously make offers. Palo Alto seems to be on fire! Inventory is hovering around 70-75 in Palo Alto, with multiple offers occurring on almost everything below $2.5 million. The Palo Alto luxury market also remains strong, often times the listings are selling before they hit the market. Redwood City and San Carlos are reporting that buyers are very cautious about making offers and seem to still think prices will decline. Have they read the most recent Reality Check message? This may be a good time for a refresher?
San Francisco—Much of the City seems to suddenly be experiencing the summer doldrums. With residents fleeing the City to enjoy much needed vacations and many of our own Agents doing the same, activity seems to have slowed a bit—but of course it is important to point out that this is very traditional for this time of year. Having said that, open houses still remain pretty active which is a good sign that activity will increase over the next month. Typically, once we are through the July and mid-August slowdown, we start to see a strong increase as we head into September and I think this year will be no different. One interesting note I would like to point out, however, is that of our Lakeside office which, despite the summer slowdown, enjoyed seven multiple offers this past week. Not bad for July!
Santa Cruz County—Price seems to be the name of the game in this market. The old adage of “if it shows well and is priced well, it will sell” is certainly holding true. Sellers need to continue to price their home competitively and adjust the price downward in a timely manner in order to get the property sold.
Silicon Valley—Continues to be a mixed bag. One thing we are seeing throughout the market is increased open house activity. It seems buyers are finally coming to the realization that this is the best time to buy and are cautiously moving forward. Our Cupertino De Anza office went up to 21 pendings this week. Our Los Altos First Street office is noting that 33% of its sales went into multiples. And Los Gatos is proudly noting “We are lucky with lots of activity and cash buyers.” The flip side? While activity is starting to increase, the issue seems to be closing the deals. Some buyers are having difficulty qualifying for loans. Others are pulling out with little to no warning. The key is keeping the transaction together which often takes a lot of negotiation on both sides of the transaction.
All in all, the market is continuing rather steadily as it has the last several weeks. Things seem to be moving at a steady pace—even with many vacationing Realtors and clients. Buyers and sellers who are facing the realities of today’s market seem to be the most successful. Those who are living in the past seem to languish.
Weekly Market Watch
Weekly Market Watch
July 7-13
It’s the Best Time to Buy in More Than Four Years!
At least that’s what I gathered from DataQuick’s release of its June report (http://www.dqnews.com/News/California/Bay-Area/RRBay080717.aspx) late last week. Of course the media took a different spin, focusing heavily on the negative. Some say I am the eternal optimist, but I do have several quantifiable reasons for my take. Read on.
Let’s start with DataQuick’s lead: “The median price paid for a Bay Area home plunged to $485,000 in June, marking the first time in more than four years that it was below the half-million mark.” Of course, news media outlets ran screaming with headlines like “Home sales plunge to near record lows” but how can you not look at the other side? The fact is, when prices fall to their lowest levels in four years, what it becomes is music to the ears of buyers. And here comes that first time home buyer again, creating that domino effect (I mentioned two weeks ago) for what could be our entire housing market in the coming months.
Yet another reason? The Commerce Department said Thursday that construction of single-family homes dropped 5.3% in June to a seasonally adjusted annual rate of 647,000 units, the weakest performance since January 1991, another period when the housing industry was going through a severe downturn. So how could this possibly be good? The fact is that our population is growing and over the next several years, we are going to continue to need additional housing. When construction of new homes slows, increasing demand will lower inventories, pushing prices back up again. All of these factors are positioning us for a turnaround. And while we prepare for that, my best advice to you is to stay the course. Continue to support your clients with your professional advice and your expert local market knowledge.
A lot of buyers are finding that they can afford more house now than they could’ve hoped for a year or two ago. Certainly, there are tremendous buys out there. But, on the contrary, most sellers aren’t going to give their homes away. Not all sellers are willing to deeply discount their asking prices. Buyers need to be aware of this before they go into an offer hoping to deeply discount it without fully understanding the appropriate local comps.
So, enough said, let’s get into our market updates for the week:
East Bay—The theme in Berkeley? “Bring on the listings!” This market is enduring what the Peninsula and the City saw for some time—low inventory. In fact, they only have 2-3 months of core inventory in their market. Oakland reports that good inventory isn’t sitting long and cautions sellers to decide if they are truly motivated to sell if a listing doesn’t go under contract in the first month. Castro Valley, after months of rapid fire REO activity, is starting to see listing inventory grow again. Our Livermore office is reporting that one Agent wrote an offer on a Tracy REO listing that had 22 offers. The Tri-Valley seems to be relatively unchanged week over week with still plenty of buyers who are just holding out for the value.
Monterey County—After coming off a slow, three day weekend which is typically our Monterey heyday, we were surprised to find that this week was surprisingly strong. Activity picked up and we had 14 deals go into escrow. Yet another example of how difficult this year is to predict in real estate.
North Bay—REOs continue to be the driving force for much of Sonoma County. This week our Petaluma office reported that they had 22 new sales, 16 of which went into multiple offers. The majority of that activity was in the below $500K mark. Again, welcome home first time home buyer. We’ve missed you! Nearby Marin is a mixed bag. San Rafael agents are seeing price points drop to all time lows thanks in large part to the flurry of REO activity. In our more affluent Marin markets, things have gotten a bit quiet. Opens seem to be seeing less traffic and deals aren’t as plentiful in Greenbrae and Mill Valley. But I also chalk that up to a lack of inventory in some areas. So we’ll see how it plays out over the next few weeks as inventory levels increase a bit thanks to the summer doldrums.
Peninsula—It seems reality has finally sunk in for many sellers (maybe Reality Check is working?) along the Peninsula and they are finally shifting their price points to reflect current market conditions. Price points are now more in line with today’s trends and buyers seem to be more pleased with their positioning and are starting to get in on the market. Sellers, though resistant at first, seem to have come around and, after coping with the reality of the offers they’ve been receiving, are coming to realize this may be the current “value” of their home. In Menlo Park, Palo Alto and Redwood City, markets that have been plagued for at least a year by low inventories, are witnessing an increase of inventory by more than 50% year over year. San Mateo, on the contrary, is reporting pending sales up 22% for July (from 2007) and closed sales are up 22% (from July 2007).
San Francisco—The market seems to be picking up after the 4th of July slowdown. In fact, we had 13 multiple offer listings among our five San Francisco offices this week. Not bad folks! But while some listings are getting multiple offers, typically prices aren’t going much over asking, if at all. We are also seeing some listings that sit. Demand for well-located and desirable properties is constant but anything less than that is languishing and driving inventories (in some neighborhoods) up. Sellers beware of this fact as you prepare your home for sale. You need to properly position your home BEFORE it hits the market or, in all likelihood, it could go relatively unnoticed—even in our beloved City.
Santa Cruz County—A market plagued by REOs, Santa Cruz County has definitely seen its share of falling prices. In fact, the median price has dropped $150,000 over this time last year and unit sales are down 29.5% from the first half of 2007 versus the same period of 2008. But going to my glass half full reference, if buyers don’t see the opportunity that is presenting itself here, they better start!
Silicon Valley—A mixed bag. Cupertino saw a huge surge this week with their pendings increasing from seven to 19! An anomaly? It’s hard to say. This market seems to change with the wind and we never know from one week to the next whether inventory and sales will be up or down. Silicon Valley is also seeing its fair share of price reductions as sellers begin to come to the reality of today’s market conditions. Sellers who seem to prevail are those who price their homes competitively from the start and don’t test the waters.
Both pricing and presentation are vital in today’s market. Buyers seem to be only noticing two things: new inventory, and new price reductions. If you want your home to remain competitive in today’s market, you need to consider this fact. I urge sellers to not test the waters when placing their home on the market. Homes that sell will be priced competitively and presented in the best light possible
July 7-13
It’s the Best Time to Buy in More Than Four Years!
At least that’s what I gathered from DataQuick’s release of its June report (http://www.dqnews.com/News/California/Bay-Area/RRBay080717.aspx) late last week. Of course the media took a different spin, focusing heavily on the negative. Some say I am the eternal optimist, but I do have several quantifiable reasons for my take. Read on.
Let’s start with DataQuick’s lead: “The median price paid for a Bay Area home plunged to $485,000 in June, marking the first time in more than four years that it was below the half-million mark.” Of course, news media outlets ran screaming with headlines like “Home sales plunge to near record lows” but how can you not look at the other side? The fact is, when prices fall to their lowest levels in four years, what it becomes is music to the ears of buyers. And here comes that first time home buyer again, creating that domino effect (I mentioned two weeks ago) for what could be our entire housing market in the coming months.
Yet another reason? The Commerce Department said Thursday that construction of single-family homes dropped 5.3% in June to a seasonally adjusted annual rate of 647,000 units, the weakest performance since January 1991, another period when the housing industry was going through a severe downturn. So how could this possibly be good? The fact is that our population is growing and over the next several years, we are going to continue to need additional housing. When construction of new homes slows, increasing demand will lower inventories, pushing prices back up again. All of these factors are positioning us for a turnaround. And while we prepare for that, my best advice to you is to stay the course. Continue to support your clients with your professional advice and your expert local market knowledge.
A lot of buyers are finding that they can afford more house now than they could’ve hoped for a year or two ago. Certainly, there are tremendous buys out there. But, on the contrary, most sellers aren’t going to give their homes away. Not all sellers are willing to deeply discount their asking prices. Buyers need to be aware of this before they go into an offer hoping to deeply discount it without fully understanding the appropriate local comps.
So, enough said, let’s get into our market updates for the week:
East Bay—The theme in Berkeley? “Bring on the listings!” This market is enduring what the Peninsula and the City saw for some time—low inventory. In fact, they only have 2-3 months of core inventory in their market. Oakland reports that good inventory isn’t sitting long and cautions sellers to decide if they are truly motivated to sell if a listing doesn’t go under contract in the first month. Castro Valley, after months of rapid fire REO activity, is starting to see listing inventory grow again. Our Livermore office is reporting that one Agent wrote an offer on a Tracy REO listing that had 22 offers. The Tri-Valley seems to be relatively unchanged week over week with still plenty of buyers who are just holding out for the value.
Monterey County—After coming off a slow, three day weekend which is typically our Monterey heyday, we were surprised to find that this week was surprisingly strong. Activity picked up and we had 14 deals go into escrow. Yet another example of how difficult this year is to predict in real estate.
North Bay—REOs continue to be the driving force for much of Sonoma County. This week our Petaluma office reported that they had 22 new sales, 16 of which went into multiple offers. The majority of that activity was in the below $500K mark. Again, welcome home first time home buyer. We’ve missed you! Nearby Marin is a mixed bag. San Rafael agents are seeing price points drop to all time lows thanks in large part to the flurry of REO activity. In our more affluent Marin markets, things have gotten a bit quiet. Opens seem to be seeing less traffic and deals aren’t as plentiful in Greenbrae and Mill Valley. But I also chalk that up to a lack of inventory in some areas. So we’ll see how it plays out over the next few weeks as inventory levels increase a bit thanks to the summer doldrums.
Peninsula—It seems reality has finally sunk in for many sellers (maybe Reality Check is working?) along the Peninsula and they are finally shifting their price points to reflect current market conditions. Price points are now more in line with today’s trends and buyers seem to be more pleased with their positioning and are starting to get in on the market. Sellers, though resistant at first, seem to have come around and, after coping with the reality of the offers they’ve been receiving, are coming to realize this may be the current “value” of their home. In Menlo Park, Palo Alto and Redwood City, markets that have been plagued for at least a year by low inventories, are witnessing an increase of inventory by more than 50% year over year. San Mateo, on the contrary, is reporting pending sales up 22% for July (from 2007) and closed sales are up 22% (from July 2007).
San Francisco—The market seems to be picking up after the 4th of July slowdown. In fact, we had 13 multiple offer listings among our five San Francisco offices this week. Not bad folks! But while some listings are getting multiple offers, typically prices aren’t going much over asking, if at all. We are also seeing some listings that sit. Demand for well-located and desirable properties is constant but anything less than that is languishing and driving inventories (in some neighborhoods) up. Sellers beware of this fact as you prepare your home for sale. You need to properly position your home BEFORE it hits the market or, in all likelihood, it could go relatively unnoticed—even in our beloved City.
Santa Cruz County—A market plagued by REOs, Santa Cruz County has definitely seen its share of falling prices. In fact, the median price has dropped $150,000 over this time last year and unit sales are down 29.5% from the first half of 2007 versus the same period of 2008. But going to my glass half full reference, if buyers don’t see the opportunity that is presenting itself here, they better start!
Silicon Valley—A mixed bag. Cupertino saw a huge surge this week with their pendings increasing from seven to 19! An anomaly? It’s hard to say. This market seems to change with the wind and we never know from one week to the next whether inventory and sales will be up or down. Silicon Valley is also seeing its fair share of price reductions as sellers begin to come to the reality of today’s market conditions. Sellers who seem to prevail are those who price their homes competitively from the start and don’t test the waters.
Both pricing and presentation are vital in today’s market. Buyers seem to be only noticing two things: new inventory, and new price reductions. If you want your home to remain competitive in today’s market, you need to consider this fact. I urge sellers to not test the waters when placing their home on the market. Homes that sell will be priced competitively and presented in the best light possible
Weekly Market Watch
Weekly Market Watch
Week of June 30- July 7
It was a mixed week of activity, marked by high temperatures around the Bay. It was also impacted by the three day Independence Day weekend, which took focus away from home shopping for many. The most positive outlook came this week from the National Associations of Realtors® in its forecast for the remainder of 2008, in to 2009. For the year, NAR predicts existing-home sales to total 5.31 million and increase to 5.58 million next year. The news is also good for new-home sales and median prices where, after a decline for 2008, NAR predicts a rise of 12.5 percent and 5.5 percent, respectively, in 2009.
Inventory is still pretty high in Northern California, but it looks like things are beginning to level off. The number of listings on MLS in June dropped by 1.4 percent in the San Francisco Bay Area and 3.9 percent in Sacramento since May. Meanwhile, the Real-Time Housing Market Report announced that home prices declined only eight-tenths of a percent over the past three months.
So it looks like buyers are slowly starting to come around and take advantage of some excellent values out there. The Market Composite Index, a measure of mortgage loan application volume, showed a 7.5 percent increase in the first week of July compared to the previous week. Rates on 30-year fixed-rate mortgages increased to 6.43 percent that week from 6.33 percent the week before week. NAR is expecting that rate to rise gradually to 6.5 percent by year’s end and then hold steady for most of 2009.
The Pending Home Sales Index shows that the west has been slowly improving this year. We saw our largest increase this April after an 8.3 percent increase over March. While it’s true the PHSI slipped 1.3 percent in May, it’s still two percent higher than May 2007. In addition, May saw double-digit pending sales gains over the same month the previous year for Sacramento.
Air conditioning or open houses? It seems that was the dilemma of the week. So let’s see if folks braved the heat, or stayed indoors:
- East Bay – Highs and lows, ups and downs—that basically sums up the region over the past week. Overall, the East Bay is reporting an increase in inventory, but more inventory could mean more interest. In Orinda and Oakland, sales are still pretty strong and agents are praised for not letting the heat keep them inside. The Castro Valley office says several of their agents spent days on end showing properties from morning ‘til night. In Berkeley and El Cerrito, open houses brought in 70 to 200 people! In San Leandro, one agent stopped counting after 72 groups came through one of his open houses. Unfortunately, a brief cold front set in and the same agent held an open house in Livermore on Saturday and didn’t have any visitors. Still, Livermore is enjoying improvements with a decline in active inventory and an increase in pending sales from the week before. Looks like even triple digits aren’t keeping potential buyers from looking for their ideal homes.
- North Bay – Things are fairly steady, with Santa Rosa buyers taking advantage of REOs and listings with price reductions. The Greenbrae office reported multiple offers on listings in Larkspur and Novato. Southern Marin is still holding its own regarding price, although units are off due to fewer properties coming on the market. Only 12 properties sold in June in Sausalito and Tiburon, however ASP increased to $2,440,000.
- Peninsula – Yes, it was another slow week due to the holiday. But as the Burlingame office points out, once agents return to the office and begin scheduling appointments, things begin to pick up. Open houses have been fairly well attended, likely due to the low inventory. The big victory this week came from the Menlo Park-El Camino office with eight offers on a $1.8+ million listing. In the end, it sold for $2.2 million and the seven buyers who missed out are still looking!
- Monterey – Steady as she goes. Multiple offers and lots of open houses these past weeks. Maybe folks are looking to beat the heat by moving to the coast. It’s pretty hard to resist a cool sea breeze when we’re baking up north. -
- San Francisco – Overall this week was fairly slow after the holiday weekend. The Market Street office did report multiple offers on a $2+ million listing which, at four offers, was the highest of the week. The Lombard office also reports that “deals continue to be ratified very close to asking.”
- Silicon Valley – There are mixed reports coming out of this region this week. The phones are ringing like crazy in at the San Jose Willow Glen office where an increase in sales has agents enthusiastic. But elsewhere around the Silicon Valley, offices say things are still pretty slow after the 4th of July holiday. Maybe folks are still recovering from too much fun at their holiday BBQ’s. There’s still cause to celebrate though as the majority of offices report listing inventory is steady or decreasing and overall sales are mostly increasing. The Los Altos office had a well attended open house this week and with their new inventory reports that “the general feel is upbeat.”
Overall we've seen higher priced communities remaining steady or moderate increases in price while inventories remain low. Our more densely populated suburbs in the lower and medium price ranges are offering opportunities with price reductions, short sales, and REO’s. It will be important to stay in close contact with our mortgage partners at Princeton Capital this week, as FannieMae and FreddieMac will be in the news all week, as well as the federal seizure of IndyMac Bank. More on this next week.
Week of June 30- July 7
It was a mixed week of activity, marked by high temperatures around the Bay. It was also impacted by the three day Independence Day weekend, which took focus away from home shopping for many. The most positive outlook came this week from the National Associations of Realtors® in its forecast for the remainder of 2008, in to 2009. For the year, NAR predicts existing-home sales to total 5.31 million and increase to 5.58 million next year. The news is also good for new-home sales and median prices where, after a decline for 2008, NAR predicts a rise of 12.5 percent and 5.5 percent, respectively, in 2009.
Inventory is still pretty high in Northern California, but it looks like things are beginning to level off. The number of listings on MLS in June dropped by 1.4 percent in the San Francisco Bay Area and 3.9 percent in Sacramento since May. Meanwhile, the Real-Time Housing Market Report announced that home prices declined only eight-tenths of a percent over the past three months.
So it looks like buyers are slowly starting to come around and take advantage of some excellent values out there. The Market Composite Index, a measure of mortgage loan application volume, showed a 7.5 percent increase in the first week of July compared to the previous week. Rates on 30-year fixed-rate mortgages increased to 6.43 percent that week from 6.33 percent the week before week. NAR is expecting that rate to rise gradually to 6.5 percent by year’s end and then hold steady for most of 2009.
The Pending Home Sales Index shows that the west has been slowly improving this year. We saw our largest increase this April after an 8.3 percent increase over March. While it’s true the PHSI slipped 1.3 percent in May, it’s still two percent higher than May 2007. In addition, May saw double-digit pending sales gains over the same month the previous year for Sacramento.
Air conditioning or open houses? It seems that was the dilemma of the week. So let’s see if folks braved the heat, or stayed indoors:
- East Bay – Highs and lows, ups and downs—that basically sums up the region over the past week. Overall, the East Bay is reporting an increase in inventory, but more inventory could mean more interest. In Orinda and Oakland, sales are still pretty strong and agents are praised for not letting the heat keep them inside. The Castro Valley office says several of their agents spent days on end showing properties from morning ‘til night. In Berkeley and El Cerrito, open houses brought in 70 to 200 people! In San Leandro, one agent stopped counting after 72 groups came through one of his open houses. Unfortunately, a brief cold front set in and the same agent held an open house in Livermore on Saturday and didn’t have any visitors. Still, Livermore is enjoying improvements with a decline in active inventory and an increase in pending sales from the week before. Looks like even triple digits aren’t keeping potential buyers from looking for their ideal homes.
- North Bay – Things are fairly steady, with Santa Rosa buyers taking advantage of REOs and listings with price reductions. The Greenbrae office reported multiple offers on listings in Larkspur and Novato. Southern Marin is still holding its own regarding price, although units are off due to fewer properties coming on the market. Only 12 properties sold in June in Sausalito and Tiburon, however ASP increased to $2,440,000.
- Peninsula – Yes, it was another slow week due to the holiday. But as the Burlingame office points out, once agents return to the office and begin scheduling appointments, things begin to pick up. Open houses have been fairly well attended, likely due to the low inventory. The big victory this week came from the Menlo Park-El Camino office with eight offers on a $1.8+ million listing. In the end, it sold for $2.2 million and the seven buyers who missed out are still looking!
- Monterey – Steady as she goes. Multiple offers and lots of open houses these past weeks. Maybe folks are looking to beat the heat by moving to the coast. It’s pretty hard to resist a cool sea breeze when we’re baking up north. -
- San Francisco – Overall this week was fairly slow after the holiday weekend. The Market Street office did report multiple offers on a $2+ million listing which, at four offers, was the highest of the week. The Lombard office also reports that “deals continue to be ratified very close to asking.”
- Silicon Valley – There are mixed reports coming out of this region this week. The phones are ringing like crazy in at the San Jose Willow Glen office where an increase in sales has agents enthusiastic. But elsewhere around the Silicon Valley, offices say things are still pretty slow after the 4th of July holiday. Maybe folks are still recovering from too much fun at their holiday BBQ’s. There’s still cause to celebrate though as the majority of offices report listing inventory is steady or decreasing and overall sales are mostly increasing. The Los Altos office had a well attended open house this week and with their new inventory reports that “the general feel is upbeat.”
Overall we've seen higher priced communities remaining steady or moderate increases in price while inventories remain low. Our more densely populated suburbs in the lower and medium price ranges are offering opportunities with price reductions, short sales, and REO’s. It will be important to stay in close contact with our mortgage partners at Princeton Capital this week, as FannieMae and FreddieMac will be in the news all week, as well as the federal seizure of IndyMac Bank. More on this next week.
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