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.